Properties

Tungsten

Sisson Brook is a large, open-pittable tungsten-molybdenum-copper deposit located near Fredericton, New Brunswick. Zone III in the deposit contains tungsten (usually quoted in the form of the oxide, W03) and molybdenum. Slated for production in 2012, the Sisson Brook Deposit would account for 4% to 5% of the world's total tungsten supply.

What is Tungsten used for?

Metal cutting tools
Drill bits
Light bulb filaments
High temperature alloys
Military use (replacing lead bullets)
Chemical applications

Tungsten has a density greater than that of lead and uranium and is similar to that of gold. Its hardness is exceeded only by diamond and it does not break down or decompose. It is very inert and replaces lead in uses where it is exposed to the environment.

What is driving Tungsten prices currently?

China has increased domestic demand for tungsten products (it is now importing both scrap and concentrate)
China has decreased raw material exports to preserve reserves. The Country went from providing export incentives for tungsten exports to production and export quotas, and is consistently increasing export tariffs
No new major production has actually occurred outside China and won't until late 2009
Rapid increase in mine development costs limit new production
Limited availability of high grade deposits

Overall, there is a very limited supply of tungsten going to markets outside China and demand for tungsten is increasing within China as well. There is an increasing need for new Tungsten Mines to go into production outside China.

Price & Consumption

Current Price of Tungsten: US $220-250/mtu for APT, or ammonium paratungstate, a refined form in which the metal is usually bought and sold.
Over the next 5 years it is forecast that global prices for APT will reach or even exceed US$300/mtu; increase of almost 25% from its current level
Current global consumption of tungsten: 81,200 tonnes per annum (including 59,800 t of new primary production, the rest is scrap)
Over the next 5 years to 2012, this will increase to: 109,328 tonnes, requiring almost 82,000 t of primary output -- an increase of some 22,000 t of 'new' production
Largest consumer of tungsten in the world: China, followed by Europe & North America.
Fastest growth in tungsten consumption: China, followed closely by India

Growth

Mature markets (Europe & N. America) expected to grow by 2% per annum
China domestic consumption is expected to continue growing in excess of 10% per annum, driven by increase in requirements for cutting and drilling tools

Overall the barriers of entry for a new producer of tungsten outside China will be minimal apart from actual development costs.

Source: A Preliminary Market Review of Tungsten, Goodall Business and Resource Management Pt Ltd, January 2008