Highlights
- China controls over 80% of global tungsten supply, prompting strategic efforts by Western countries to reduce dependency.
- New non-Chinese tungsten mining projects in South Korea, Kazakhstan, and Australia aim to challenge China’s market dominance.
- Geopolitical tensions and economic incentives drive the reconfiguration of critical minerals supply chains away from China.
Recently Evelyn Cheng writing for CNBC examines (opens in a new tab) China’s restriction of tungsten exports, the strategic implications for global markets, and efforts by countries like the U.S. and South Korea to diversify and strengthen their supply chains. Rare Earth Exchanges reviews the CNBC reporter’s logic, assumptions, and biases.
Before addressing the article some realities:
China is the main source of tungsten imported into the United States, accounting for around 30% of US tungsten imports. China also controls over 80% of the world’s tungsten extraction and processing.
| China | |
|---|---|
| Tungsten supply | China controls around 80% of the world’s tungsten supply chain, and around half of the world’s tungsten reserves. |
| Tungsten production | China contributes more than 80% to global tungsten mine production. |
| Tungsten imports to the US | China has been the largest source of tungsten imported into the United States since 2017. |
The US doesn’t produce any tungsten domestically, and the US hasn’t reported primary tungsten production since 2015.
Tungsten is used in a wide range of industrial applications, including electrical wires, welding, heavy metal alloys, turbine blades, and as a lead substitute in bullets.
Article Review
First the article (opens in a new tab) effectively contextualizes China’s move to limit tungsten exports as part of broader U.S.-China tensions. Cheng connects this decision with the U.S. Department of Defense’s policy to phase out Chinese tungsten by 2027 and rising global demand for the metal.
Delving into global supply chain dynamics, the mention of non-Chinese tungsten projects (e.g., South Korea’s Sangdong mine, Kazakhstan, Australia, and Spain) supports the narrative that diversification efforts are underway. This logically aligns with the global trend of “friendshoring” critical minerals to reduce reliance on China. Remember Rare Earth Exchanges was launched last month to chronicle the worldwide reconfiguration of the critical minerals supply chain.
So, what are the market implications?
The discussion of tungsten pricing highlights an important economic mechanism: higher prices could incentivize the reopening of dormant mines. This is a well-reasoned argument for how market forces might counteract China’s export restrictions.
Delving into a historical context, Cheng accurately notes China’s past strategy of flooding the market with cheap tungsten to dominate supply chains. This historical context strengthens the argument that China’s new restrictions reflect a strategic shift.
But are any assumptions made?
The article assumes that China’s move to restrict tungsten exports is purely strategic, aiming to maintain leverage in global trade or geopolitical tensions. While plausible, no direct evidence from Chinese policymakers is presented to confirm this motivation.
The CNBC writer also assumes rising prices incentives mining. While this seems a logical inference, the article assumes that higher tungsten prices will lead to profitable mining operations outside China. However, this ignores potential challenges, such as environmental regulations, local opposition, or high startup costs, which could delay or undermine these projects. All sorts of challenges can ensue; ones that are not necessarily worked out in the short or even intermediate run.
Also implicit in this CNBC piece is the rapid growth of non-China supply. Cheng assumes that new or reopened mines in South Korea, Kazakhstan, and the U.S. can scale production quickly enough to meet rising demand. The timeline for such projects is often unpredictable due to technical, financial, or regulatory hurdles.
Then there is the topic of sustainability of “friendshoring.” The author assumes that “friendshoring” will provide a reliable alternative to Chinese tungsten. This presumes that political stability, consistent policy, and sufficient investment will support long-term partnerships, which may not always hold true.
Moreover, the article also assumes a continued global demand, a steady pace of growth. But life does not always work out like this.
While it’s likely that demand for tungsten will continue to rise in both military and civilian sectors, this does not account for potential technological shifts or substitutes that could reduce tungsten reliance.
Any Biases Present in the CNBC piece?
Of course, wherever there are humans, there are biases. We here at Rare Earth Exchanges are not immune from this fact. But we can strive to be as objective as possible.
The CNBC not surprisingly is packaged with pro-Western framing. That is, the article leans toward highlighting Western efforts to counteract China’s dominance, such as the Sangdong mine or U.S. tariffs, without equally analyzing the potential impact of China’s restrictions on its domestic industries or global allies.
While the article mentions global efforts to reduce dependence on Chinese tungsten, it presents these initiatives (e.g., Sangdong reopening, IMA mine acquisition) in an optimistic light, potentially underestimating challenges like cost, logistics, and geopolitical risks.
All sorts of other assumptions are included such as those of an economic nature. For example, the suggestion that higher tungsten prices will automatically make mining profitable simplifies the complexities of mining economics, such as capital requirements, operational costs, and market volatility.
Also, by framing China’s historical tungsten strategy as an attempt to “put competitors out of business,” the article implicitly criticizes Chinese practices without acknowledging that such strategies are not unique to China and have been used by other nations to dominate markets.
The CNBC author keeps fairly clear of the environmental and social factors involved with this topic. Meaning Cheng largely ignores the environmental and social impacts of mining operations outside China, which could delay or complicate projects in places like South Korea and the U.S.
Rare Earth Exchanges Opens up some key questions not addressed in the Cheng piece.
We include the questions below:
What Are the Long-Term Implications of China’s Strategy?
How might China’s restrictions affect its own industries and allies? Will this decision backfire by accelerating global diversification and reducing its dominance?
How Feasible Is the “Friendshoring” Strategy?
Can countries like the U.S. and South Korea sustain these efforts in the face of rising costs, political changes, or potential over-reliance on a small number of suppliers? While we chronicle lots of evidence for that direction, we need to keep the critical questions open.
How Will Supply Chain Diversification Affect Prices?
If non-China suppliers increase production, will tungsten prices stabilize or decrease, and how might that affect the profitability of mining operations?
What Alternatives Exist?
Are there technological innovations or substitutes that could reduce reliance on tungsten for weapons and semiconductors?
What Are the Environmental and Social Costs?
How do new mining projects outside China address concerns about environmental degradation, local community impacts, and regulatory compliance?
Final Thoughts
The article provides a comprehensive overview of the tungsten export landscape, emphasizing China’s dominance and the global push for diversification. Its logic is strong when discussing economic incentives, historical context, and geopolitical tensions. However, it makes significant assumptions about the feasibility and sustainability of non-China supply chains, often presenting Western efforts in an optimistic light while lacking a balanced view of challenges.
The reporter may very well be correct, but offering alternative scenarios helps sharpen the collective understanding of the true underlying risks of the current supply chains.
Daniel
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