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

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

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

Iran's war on top of Ukraine, now in its fifth-year, is draining stock not only of?missiles? but of metals that makes them lethally effective.

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 based on data from the U.S. Geological Survey, tungsten is now trading at its highest level for at least 90 years.

According to the USGS China is responsible for 80% of the global mined tungsten production. It is also leveraging this?dominance in the rare-earths sector.

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 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 largest producer in the world would be likely to fall.

PRIMMING THE PIPELINE

Western supply has improved, but from a low starting point. Project?Blue estimates that non-Chinese production?rose 20% on an annual basis to 19,000 tonnes last year.

This was due in large part to the opening of the Boguty Mine in Kazakhstan. Kazakhstan is proving itself as a key player 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 away before core components of the expanding portfolio can actually 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 rebuild munitions following the depletion caused by the conflict in Ukraine, followed by the hostilities in Gulf, which are largely missile-intensive.

Military buyers are always able to outbid civilians. This could mean trouble for high-end producers who use tungsten as a component in solar panels, semiconductors 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 many minerals that are used to make munitions.

Although detailed information on the Tomahawk missile is classified, it is believed that up to 18 metals are critical to its electronics, guidance and warhead systems.

Amanda van Dyke is the founder of Critical Minerals Hub. She argues that the Gulf Conflict amounts to "a massive mineral sink."

Most of the minerals that are in question today are produced in China.

The Iran war will strengthen the West's desire for greater mineral autonomy. 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)