The dramatically increasing price of tungsten makes it almost equivalent economic situation as rare earth in market. Tungsten has a great application on producing wear parts, cutting tools for machinery, mining and drilling tools, etc.
Over the past year, prices for tungsten, which is the world’s hardest metal – with a boiling temperature of 5 700 Celsius, the temperature at the sun’s surface – have doubled to between $46 000/t and $48 500/t, and it is predicted that further increases are on the cards.
A key difference is that rare earths are mainly used in new technologies, including smart phones, electric cars and wind turbines, making them “sexier”, and attracting more headlines
About 70% of tungsten goes into industrial applications, on the other hand, while only a small, but increasing, percentage goes into modern technologies such as the Apple’s iPad touch-screen.
China flooded the market with cheap tungsten concentrate in 1980s and 1990s, leading to an oversupply and prices low enough to squeeze out nearly all non-Chinese production. The result has been a global shortage, with China – which accounts for over 80% of production – restricting tungsten exports.
For the past few years, the shortfall in mined supply has been filled by recycling, but that this has now reached maximum capacity, while demand continues to grow at around 5% a year. The final consumers don’t really mind about the tungsten price, they mind about where they’re going to get it.
TSX-V-listed Malaga owns the operating Pasto Bueno mine in Peru, making the company only one of two publicly traded tungsten miners, the other being Vancouver-based North American Tungsten.
The company plans to produce 800 t of the metal this year, lifting this to beyond 1 000 t in 2012.
Pasto Bueno first started operating in 1941, but was forced to close early last decade after lower prices.
Malaga has now embarked on a drilling programme which will run into next year, with the aim of significantly increasing measured and indicated resources, he said.
The company could then consider building a much larger operation, depending on what the drill rigs turn up.