NextFin News - The closure of the Strait of Hormuz and the ongoing conflict in Iran have sent shockwaves through global energy and petrochemical markets, but a more structural supply crisis is quietly unfolding in the market for tungsten, a metal indispensable for modern warfare. Unlike the temporary logistics bottlenecks affecting oil and gas, the tungsten shortage is being driven by a massive drawdown of global munitions reserves and a tightening grip on supply by China, which currently controls approximately 80% of the world’s production.
U.S. demand for the metal has surged as the military replenishes stocks of armor-piercing ammunition and missiles used in Ukraine and the Middle East. According to the most recent U.S. Geological Survey (USGS) data, global production reached 81,000 metric tons in 2024, yet the United States produces virtually no tungsten domestically. This reliance on foreign sources has become a critical vulnerability as China continues to enforce strict export controls, first implemented in February 2025, citing national security concerns. The resulting supply gap has pushed prices to record levels, creating what Mark Vena, CEO of SmartTech Research, describes as "one ugly supply chain knot" that connects the factory floor to the front lines.
The urgency of the situation is underscored by new Department of Defense sourcing rules set to take effect on January 1, 2027. These regulations will prohibit the acquisition of tungsten metal powders and heavy alloys mined or refined in China, forcing a rapid and expensive pivot to alternative sources. Pini Althaus, Executive Chairman of Cove Kaz Capital, noted that the U.S. will likely require up to 20,000 metric tons of tungsten annually over the next decade—roughly a quarter of current global output—to satisfy both industrial needs and the National Defense Stockpile.
Althaus, whose firm is developing a massive open-pit mining project in Kazakhstan, represents a growing cohort of miners racing to fill the void. Cove Kaz Capital’s project is projected to produce 12,000 metric tons per year at full scale, potentially accounting for 15% of global supply. However, the project has become a lightning rod for political scrutiny. Donald Trump Jr. and Eric Trump are investors in Skyline Builders Group, which recently merged with Cove Kaz Capital. While a Trump Organization spokeswoman characterized the family as "passive investors" with no management role, the deal has prompted calls for investigation by House Democrats, particularly as the project has secured $1.6 billion in commitments from the U.S. Export-Import Bank and the International Development Finance Corporation.
While Kazakhstan offers a long-term solution with reserves expected to last over 50 years, other players are moving faster. Canada-based Almonty Industries recently commissioned its Sangdong mine in South Korea, marking the return of a major deposit that had been dormant for three decades. Almonty CEO Lewis Black has indicated that while domestic U.S. mining remains difficult to scale due to environmental and cost hurdles, the strategic necessity of non-Chinese supply is overriding traditional market logic. These projects are essential, as China has transitioned from a pure exporter to a frequent buyer of tungsten concentrates from third countries to feed its own industrial and defense requirements.
Despite the aggressive push for new mines, the transition remains fraught with execution risk. Evan Mills, a financial analyst at Scholar Advising who specializes in commodities, suggests that the market may be overestimating how quickly these new sources can reach nameplate capacity. Mills, who typically maintains a cautious outlook on junior mining ventures, points out that the technical challenges of refining tungsten to military-grade specifications often lead to multi-year delays. From this perspective, the current price surge may be a permanent shift in the metal's cost basis rather than a temporary war premium, as the West attempts to rebuild a supply chain that was outsourced decades ago.
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