Tungsten is a unique metal with many applications and investment potential. As global demand for tungsten rises, investors have taken notice and are exploring tungsten investment opportunities. However, like all investments, tungsten has risks that must be considered. This article examines tungsten investment prospects and risks for investors looking to add tungsten exposure.
Tungsten’s vital role in tech creates investment demand
Tungsten plays a critical role in electronics, aerospace, automotive, and many other hi-tech industries. Tungsten’s hardness, density and resistance to heat make it ideal for applications like light bulb filaments, drill bits, alloys, and more. As technology continues advancing in key sectors, tungsten demand rises. Major firms like Apple, Tesla, Boeing and GE rely heavily on tungsten components, driving investment interest in tungsten producers.
Tungsten mining capacity lagging behind demand
Global tungsten demand is projected to rise steadily, but mining capacity cannot keep up. Total tungsten mined in 2021 was just 92,000 metric tons. But demand could reach 135,000 tons by 2025. With constrained supply but growing demand, tungsten prices are likely to increase, making mining firms more profitable. However, opening new tungsten mines takes substantial time and capital. This supply-demand imbalance benefits existing tungsten producers.
China’s outsized role in tungsten adds uncertainty
Over 80% of global tungsten supply comes from China. This concentration in a single country poses risks. If China cut tungsten exports, global supply would plummet. Tungsten investors must factor in potential supply disruptions. However, China itself needs vast amounts of tungsten, so an export ban is unlikely unless geopolitical tensions escalate severely. But pandemics, accidents, or environmental regulations could still impact China’s output to some degree.
New tungsten sources face hurdles reaching production
With limited output growth from existing mines, the world needs new tungsten projects. But developing a new mine takes 5-10 years minimum, with substantial capital requirements. Permitting, feasibility studies, procurement, and construction must all be completed first. Even after starting production, it takes time to ramp up to full capacity. As a result, the tungsten mining pipeline remains constrained, providing support for prices.
Tungsten’s unique properties make it essential for technology, creating rising long-term demand. However, limited mining capacity and China’s dominance of supply create risks. Overall, tungsten has investment potential but volatility as well.