Andy Home: Every missile fired against Iran burns through US tungsten stock

Israel and the U.S. have used thousands of munition in their air campaign to combat Iran. The majority, if not all, of these munitions contain tungsten, which is a super-hard material that allows missiles penetrate armour and underground bunkers.

The tungsten in munitions, unlike a tungsten-carbide drill bit that can be recycled is destroyed by detonation. It's gone forever.

The Iran 'war, which is now in its fifth year and has been fought on top of Ukraine, is draining not only missile stocks but also the metals needed to make them so deadly.

It will be difficult to replace what was used. China's tightening of export controls to counter U.S. Tariffs in February 2025 had already weakened the tungsten industry. Now, it's in crisis.

TUNGSTEN ROCK

Since then, tungsten prices have been on a parabolic rise. According to Shanghai Metals Market, the Rotterdam market price for ammoniumparatungstate (APT), a product intermediate used to produce tungsten, has risen from $400 per metric tonne a year earlier to more than $2,200.

This makes tungsten the most valuable commodity in recent months. It has outperformed gains in gold, copper and oil.

Project Blue, consulting firm, says that U.S. Geological Survey statistics show that tungsten products have reached their highest trading level in 90 years.

According to the USGS China is responsible for 80% of the global tungsten production. It is also a major player in rare earths.

William Parry-Jones of Wolfram Advisory (a tungsten consulting firm) says that Tungsten exports are down by almost 40% since the new controls have been implemented.

A second problem exists - beyond the export restrictions. Project Blue estimates China's mining production will fall 10% annually to 61,000 tonnes in 2025 due to government quotas being lowered and environmental restrictions on smaller miners.

China's domestic market is also absorbing more tungsten. Even without new restrictions, export volumes from the world's biggest producer would be likely to fall.

PRIMING THE PIPELELINE

Western supply has improved, but from a very low base. Project Blue estimates that non-Chinese production increased by 20% on an annual basis to 19,000 tons in 2013.

This was due largely to the opening of the Boguty Mine in Kazakhstan. Kazakhstan is emerging as an important country in the non-Chinese supply chain for tungsten.

Cove Capital, a U.S. mining company that invests in the development of large tungsten deposits in Kazakhstan with $900 million in backing from the U.S. Export-Import Bank, signed a contract in November.

The Pentagon requested that industry partners supply 13 essential minerals, including tungsten, the day before U.S.-Israeli strikes against Iran began.

Amermin and Guardian Metal Resources have received federal awards to enhance their recycling capabilities.

It is still years before core components in this portfolio can produce metal.

CIVILIAN CASUALTIES

This will increase the competition for supply between the defence and civil sectors.

Project Blue estimates that the defence sector accounted around 10% of global consumption in 2013.

This ratio will only increase as Western countries and the U.S. look to replenish their munitions stocks after the depletion caused by the conflict in Ukraine, followed by the hostilities that are centered around missiles in the Gulf.

Military buyers can always outbid civilian buyers. This could spell trouble for high-end manufacturers who use tungsten to make semiconductors, solar panels, and printed circuit boards.

Electronics are a rapidly growing component of the tungsten market, and complement the metal's use in cemented carbide in the oil, gas, and mining sectors.

MINERALS BOTTLENECK

Tungsten is just one of the many critical minerals that are used in munitions.

Tomahawk Cruise Missiles are thought to contain 18 critical metals in their guidance, electronic and warhead systems, but detailed information about this is classified.

Amanda van Dyke is the founder of Critical Minerals Hub. She argues that "missile mathematics is mineral math", and that the Gulf Conflict amounts to an enormous "mineral sink."

Most of these minerals are produced in China.

The West will be more determined to gain greater mineral autonomy as a result of the?Iran War. It will take some time to build multiple new supply chain from mine to processing and product.

The West may not have the time it once had.

Andy Home is a columnist at. This column is great! Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.

(source: Reuters)