US tungsten demand is set to surge amid China trade war, and this ASX explorer could serve it on a platter

Last month China restricted tungsten exports, a critical mineral for tech and defence sectors
US does not have domestic supply and needs other sources before a 2027 deadline to end Chinese imports
TGN holds the promising Mt Mulgine, Hatches Creek and Watershed projects in Australia

Special Report: In December, China added tungsten to its list of critical metal export restrictions, doubling down on its tit-for-tat trade war with the US.

The move follows similar restrictions on other essential materials like antimony, gallium, and germanium.

The US Department of Defence has introduced new regulations that prohibit the use of Chinese tungsten after January 2027 and responded to China’s latest swipe by placing 25% tariffs on a range of tungsten products from January 1 this year.

Tungsten is used in the technology and defence industry that drives demand for tungsten, which has the highest melting point of all elements except carbon (around 3400C), making it a key element across the aerospace and defence, electronics, automotive, extractive and construction sectors with uses in cemented carbides, high-speed steels and super alloys.

China produces about 80% of the worlds’ tungsten, and while the US doesn’t produce any, Canada’s Almonty Industries is reopening its Sandong mine and processing plant in South Korea this year – and has committed 45% of production to America.

The price is holding steady at around $335MTU (MTU being 10kgs), but supply chain volatility this year could change that, with a $50MTU price rise the magical number that would make new tungsten mining ventures profitable.

Last month Lowell Resources Fund chief investment officer John Forwood told Stockhead the tungsten market is one to watch this year.

And Australian supply could play a big role with US customers under pressure to find sources outside China – and fast.

One ASX player looking to carve out a market share is Tungsten Mining (ASX:TGN), which owns the Mt Mulgine project in WA.

The massive deposit contains 259Mt mineral resource estimate at 0.11% tungsten oxide and 270ppm molybdenum for 290,000t of WO₃ and 71,000t of molybdenum. It also has 1Moz of gold among a host of metal by-products.

Chairman Gary Lyons said “Mulgine is the jewel in the crown” of the company’s world class tungsten assets in Australia, and one of the largest primary tungsten deposits in the world outside of China.

“Mulgine alone has the potential to supply up to 10% of world demand for the next 25 years,” he said.

“And there is potential to add more resources to the Mulgine project, greatly extending operational life.”

TGN also holds the Kilba and Big Hill tungsten assets in WA, the Watershed project in QLD and has recently acquired the Hatches Creek project in the NT.

Adding another tungsten play

Located 375km northeast of Alice Springs, Hatches Creek has multiple high-grade polymetallic tungsten prospects and demonstrated potential for high grade tungsten, with high grade stockpiles from historic mining already onsite.

It once ran at grades that would be considered staggering by today’s standards, producing 2840t at 65% tungsten oxide from 1915-1957.

And because it’s been underexplored since 1975, it presents significant upside potential for resource expansion, Lyons said.

“Historical stockpiles from mining operations conducted between the 1940s and 1970s remain on-site,” he said.

“Over 150,000 tonnes of these stockpiles have some grades considered high by modern standards, offering the potential to process the stockpiles as a starting point before commencing new mining activities.”

Hatches Creek predominantly consists of wolframite, which is less complex to process than the other tungsten bearing mineral scheelite. That means lower capital costs will be required.

Originally, the deal was a farm-in arrangement with TGN and joint venture partner GWR Group (ASX:GWR) but the company decided on direct acquisition instead, issuing GWR 107.5m shares at 8c per share. That will result in GWR Group’s voting power in the company increasing to approximately 19.86%.

In recently announcing the acquisition of the Mulgine tenements Mr Lyons said “It was essential that TGN own the tenements”.

“This provides complete autonomy to develop the project, delivers broader funding options and streamlines the approval process,” he said.

“Ownership will also enable TGN to focus on developing additional by-products such as gold and copper.”

Hatches Creek tungsten project location. Pic: TGN

Building the resource base in 2025

TGN has already completed 6800m of drilling at the project with assays pending. The goal is to revise its resource model and review the potential processing of historical stockpiles.

Lyons is confident the campaign will add “significant resources” to the existing resource base and that there’s potential to bring the project into production quickly.

Back at Mt Mulgine, having held the tungsten rights for a number of years, it recently completed the acquisition of the underlying tenements including all interests, rights and title to the project along with the mining information, water licence and contracts held by Minjar Gold in exchange for $3.3m cash and the assumption of environmental liabilities.

With all mineral rights now secured beyond tungsten, TGN will examining the project’s potential for gold oxide. That will enable it to produce gold in a separate operation potentially being an early cashflow generator, with prices at record highs of over $4300/oz.

As for its tungsten potential, the plan is to review and enhance the existing pre-feasibility study modelling, and to simplify the flowsheet in order to further derisk the project – and lead to a significant reduction in capex.

A pre-feasibility study in early 2021 suggested a 6Mtpa project could deliver 460,000 metric tonne units of WO3 in concentrate over its 23.5 year mine life, at all in sustaining costs of US$111/MTU WO3, helped by annual by-product credits of 1070t molybdenum, 1265t copper, 9400oz gold and 525,000oz silver.

This article was developed in collaboration with Tungsten Mining, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.