Part 1 explained how the United States and its allies lost a tungsten supply chain they once dominated, and how, in earlier periods of conflict, governments kept Western allied mines alive through direct intervention: floor prices, guaranteed purchasing, and preemptive stockpiling.
Here in Part 2, we outline how rising tungsten demand from the defence sector exacerbates the tungsten supply gap facing the United States, Europe, and allies. Governments are once again facing market conditions that will force them to intervene. Wars in Ukraine and the Middle East, rising defence budgets, and U.S. munitions replenishment are all pulling on the same limited pool of Western and allied supplied tungsten, while China’s export restrictions create a major supply chain risk. Previous lessons over the last century demonstrate that closing the gap will again require government support.
A Widening Tungsten Supply Gap
As Figure 1 illustrates below, there is a substantial gap between estimated tungsten demand in the United States, Europe, and allied nations, and supply from allied nations (non-China, Russia, North Korea, and Chinese controlled production in Kazakhstan supplies). Our estimates suggest a 19,000 metric ton tungsten supply gap (equivalent of around 10 new additional Almonty Sangdong mines) for 2026 and 2027. Defence related demand is not tungsten’s largest end use, but it is among the fastest-rising demand sector and most vital. The war in Ukraine, the conflict in the Middle East, and pledges to raise defence spending across the United States, Europe, and partner nations are all quickly putting additional demand shocks on an already fragile market. China’s export restrictions tighten the squeeze. By targeting dual-use applications, the restrictions directly impact defence-linked supply chains. These dire market conditions are forcing the U.S., NATO, and allies to look beyond China and bring new Western and allied mined supply online.
The immediate driver of increased tungsten demand in the United States is munitions replenishment. Deliveries of 155mm artillery shells to Ukraine drew down Army and Marine Corps stockpiles faster than the industrial base could replace them, prompting the Army to set a production target of over 100,000 shells per month, compared to approximately 14,000 per month in 2022 (Defense Production for Ukraine: Background and Issues for Congress, 16.09.2024). The “One Big Beautiful Bill Act” included $25 billion for munition and supply chain spending along with a further $25 billion in air and missile defence investment (Defense Funding in the 2025 Reconciliation Law, 24.07.2025). Increased raw tungsten material purchases will be required to support these developments. And it is important to note; defence tungsten is often non-recoverable as each new round produced represents a permanent draw on primary supply.
In Europe, the continent’s increased defence spending is set to drive a dramatic increase in tungsten consumption over the coming years. Poland, Germany, United Kingdom, France, and other Europe partners are expanding defence spending to meet an agreed upon 5% GDP spending threshold. The European Union is mobilizing up to €800 billion in defence spending over the next four years under the ReArm Europe plan (against a 2024 baseline of €343 billion annually) (European defence readiness). Based on Rovjok modeling, defence-specific tungsten demand is projected to climb from approximately 2,000 tonnes to 3,500 tonnes annually. The additional 1,500 tonnes of tungsten per year would require roughly one entirely new Western and allied mine just to meet European defence needs alone. If NATO members were to hit the 5% GDP spending threshold, corresponding tungsten demand would potentially require multiple new Western and allied mining operations.
Member states’ defence expenditure (2005-2025)Bottom-up analysis of specific weapons systems and munitions tells a similar story. Deliveries of ordered tanks and armoured vehicles over the next five years would consume approximately 750 tonnes of tungsten, according to the Stockholm International Peace Research Institute. The demand picture intensifies sharply when artillery and small arms ammunition enter the calculation. Approximately 5% of 155mm shells contain tungsten, and with two million shells already sent to Ukraine and stockpile replenishment underway, that single category is estimated to require roughly 1,000 tonnes. Most dramatic of all, potential increases of one billion armour-piercing bullets through U.S. and European nations stockpiling efforts would increase demand to approximately 4,000 tonnes of tungsten. In total, this defence related demand would equate to roughly 6 new mines.
Outside of NATO, Japan is moving fast to increase defence spending. Prime Minister Takaichi accelerated the 2% of GDP defence target to March 2026, ahead of the original 2027 deadline. (CNBC, Japan’s new premier pledges early boost to defence spending, ‘proactive’ fiscal moves, 24.10.2025) Japan’s cabinet approved a record FY2026 defence budget of 9.04 trillion yen ($58 billion), the first time the budget has exceeded 9 trillion yen. (The Diplomat, Japan Accelerates Defense Buildup With Record Budget and Expanded Unmanned Capabilities, 26.12.2025) South Korea approved a 7.5% defence budget increase for 2026, its largest annual rise since 2019. It has stated an ambition to expand defence spending to 3.6% of GDP from the current 2.32%. (Stars and Stripes, South Korea unveils nearly $45 billion defense budget, expands 3-axis deterrence, 04.12.2025)
In the Gulf, Saudi Arabia increased defence spending by 3.5% up to $83 billion in 2025 and analysts project Gulf-wide spending could increase by as much as 20% over the next three years as stockpiles depleted by the Iran conflict are rebuilt. (Gulf defence spending expected to rise by 20%, AGBI, 28.04.2026) Taken together, the demand increases across NATO, the Indo-Pacific, and the Gulf signal a structural change in the global security environment likely to sustain elevated munitions production for years.
Outside of defence, tungsten demand for the semiconductor supply chain is an additional fast growing and strategically important demand driver. Tungsten hexafluoride (WF₆), is a gas required for chip manufacturing. Demand for tungsten from advanced memory chip production alone is estimated to increase by 3,000 tonnes annually between 2026 and 2030. Although the U.S. and partners have companies that produce the gas, the supply chain still depends on upstream tungsten and offers China an opportunity to influence the supply chain necessary for advanced technologies and AI. Very recently, two Japanese companies, representing around 25% of global WF6 supply, have been forced to curtail production due to challenges securing high purity refined powder feedstock from China. (ChemNet, Two major Japanese manufacturers have permanently shut down their tungsten hexafluoride production lines., 01.07.2026)
Taken together, these converging demand vectors point to a structural shift that goes well beyond cyclical fluctuation. Traditional tungsten-consuming sectors including cutting tools and wear resistant components are expected to see continued modest growth in-line with industrial output. And now restocking weapons armouries, expanding semiconductor fabs, and rebuilding depleted strategic reserves will all draw on the same constrained pool of Western and allied supply, a gap that current production capacity outside China is ill-equipped to fill.
Government Intervention
The 20th century demonstrated the ability of government intervention to support the strategic supply of tungsten during periods of strategic demand requirements. The United States relied on offtake agreements and price floors to ensure mines were able to come online and maintain production. Once again, the United States and Europe are intervening in the tungsten market to support production. However, they currently relying on different mechanisms compared to last century.
First, the U.S. is attempting to utilize defence related demand to support diversification through procurement restrictions and sourcing requirements. Congress has introduced sourcing requirements over the last decade for a series to materials necessary for defence supply chains but are currently concentrated mainly in China. Tungsten is included in these requirements.
The sensitive materials restriction under Title 10 of the U.S. Code, Section 4872, prohibits the Department of Defense (DoD) (Defense Primer: Acquiring Specialty Metals and Sensitive Materials, 20.08. 2024) from procuring Chinese, Russian, North Korean, or Iranian-origin tungsten metal powder, tungsten heavy alloy, or finished components containing tungsten heavy alloy. The restriction applies to prime contracts and subcontracts at every tier. The restriction has been progressively tightened and now, through a Defense Federal Acquisition Regulation Supplement (DFARS), the restriction will cover the entire supply chain and go into effect on January 1, 2027. (Restriction on the Acquisition of Certain Magnets, Tantalum, and Tungsten.) The DoD has previously issued waivers to defence contractors on sourcing restrictions. But the Trump Administration is trying to limit waivers through the Executive Order, Securing America’s Defense Supply Chains and Ensuring Domestic Acquisition of Critical Materials, signed on July 20, 2026. The Executive Order aims to stop non-availability waivers by mandating that waivers will only be permitted when a contractor commits to a formal, time-bound plan to remove non-compliant material from its supply chain. (The White House, Securing America’s Defense Supply Chains and Ensuring Domestic Acquisition of Critical Material, 20.07.2026) The goal of the Executive Order is to force contractors and sub-contractors to remove material sourced from China and other covered nations from their supply chain and support domestic and allied production.
Further restrictions could be added in the FY2027 National Defense Authorization Act. The House version of the legislation adopts a new tiered restriction requirements on tungsten and other key materials. The restrictions would layer on top of existing restrictions. Under the proposed rule, tungsten metal powder, tungsten heavy alloy, and certain tungsten-containing components, would be considered Tier 1, which means 50 % of the cost materials must be produced in the United States. Then tungsten ores, concentrates, ammonium paratungstate, and other precursors are considered Tier 2. This designation includes a gradual tightening of sourcing requirements with 100% being sourced outside of China, Russia, North Korea, or Iran by 2031. (The Fuse, Defense Critical Minerals Policy is Moving From Sourcing Restrictions to Supply Chain Requirements, 09.06.2026) The new framework is only in the House legislation as of right now. The Senate committee’s released version does not include it, so it would need to be included in the eventual House – Senate conference bill to become law. However, the proposed restrictions are another example of Congress increasing its use of legislation to create sourcing requirements for key materials like tungsten to force diversification.
As Congress attempts to legislate tungsten diversification, the Executive Branch, under both the Biden and Trump administrations, have sought to support upcoming projects through direct financial support. However, unlike last century, the financial support supports the capital expenditures necessary to build new mines rather than targeting operating expenses. The Department of Defense awarded $15.8 million to Fireweed Metals for the Mactung project in Canada through the Defense Production Act (DPA). (Fireweed Metals, 13.12.2024) The Canadian Government also agreed to provide an additional CAD$12.9 million through the Critical Minerals Infrastructure Fund to support infrastructure development for the mine. (Fireweed Metals, 27.08.2025) Additionally, the DoD awarded Golden Metal Resources $6.2 million through the DPA for a pre-feasibility study of their Pilot Mountain project in Nevada, U.S. (U.S Department of War, 22.07.2025)
The Export-Import Bank of the United States issued a Letter of Interest (LOI) to EQ Resources for the expansion of the Mount Carbine mine in Australia. If EXIM moves forward, it would be a potential $34 million debt facility through the Supply Chain Resiliency Initiative. (Us Exim Issue Letter of Interest for Mt Carbine, 27.06.2025) Additionally, the U.S. Development Finance Corporation (DFC) issued an LOI to Cove Kaz Capital for up to $700 million in finance development for the Severniy Katpar Mine in Kazakhstan. (U.S. International Development Finance Corporation, 04.02.2026) It is important to note, LOI’s are not committed capital.
Finally, the Defense Logistics Agency (DLA) within the DoD has sought to purchase up to 1,715 metric tons of tungsten ores and concentrates for the National Defense Stockpile. (U.S. System for Award Management, 27.08.2025)
Taken together, these interventions mark a departure from the playbook of the last century. Twentieth-century policy intervention targeted the operating expenditures through guaranteed prices and offtake agreements to ensure mines were economical. Today’s support is currently weighted toward capital expenditures. But construction funding cannot make an operating mine economical if prices collapse, and the largest commitments announced so far remain LOI’s rather than disbursed capital.
Current Supply Options
Regardless of the form of policy support, the current map of tungsten production amongst the United States and allies remains limited. China, Russia, Kazakhstan (through a Chinese-operated mine), and North Korea currently account for up to 90% of global mined tungsten production. Figure 6 highlights the currently operating tungsten mines easily available to the United States and partners.
Barruecopardo — EQ Resources (Salamanca Province, Spain)
Barruecopardo Mine is an operating tungsten mine in western Spain that produces approximately 1,500 tonnes of WO₃ annually in high-quality scheelite concentrate. The deposit was originally mined in the early 20th century and was restarted as a modern open-pit operation in 2019 after nearly four decades of inactivity.
Panasqueira — Almonty Industries (Covilhã, Portugal)
Panasqueira Mine is one of the world’s longest continuously operating tungsten mines. Tungsten mineralization was identified in the late nineteenth century, and a formal mining license was issued in 1896. The deposit remains one of Europe’s most important tungsten sources and continues to be expanded through ongoing exploration and underground development. The mine will produce an estimated 850-950 tonnes of WO₃ annually contained in tungsten concentrate.
Mittersill — Sandvik Group via Wolfram Bergbau und Hütten AG (Salzburg State, Austria)
Mittersill Mine is one of the largest deposits in Europe and has been in production since the 1970s. The underground mine produces around 1,200 tonnes of WO₃ annually contained in scheelite concentrate that feeds into Sandvik’s vertically integrated tungsten supply chain. Ore from Mittersill is processed by Wolfram Bergbau und Hütten at its conversion and powder-metallurgy facilities in Austria, producing ammonium paratungstate, tungsten powder, and tungsten carbide used in cutting tools and industrial applications.
Nui Phao — Masan High-Tech Materials (Thai Nguyen Province, Vietnam)
Nui Phao Mine is a large polymetallic deposit and one of the largest tungsten mines outside China. The open-pit operation and concentrate producer contains substantial reserves of tungsten along with fluorspar, bismuth, and copper. The mine produces on average 3,400 tonnes of WO₃ annually.
Chojlla — International Mining Company (Sud Yungas Province, La Paz Department, Bolivia)
Chojlla Mine is an underground tungsten and tin mine located in Bolivia’s Cordillera Oriental within the Andean mountain system. The deposit hosts wolframite- and ferberite-bearing veins and has historically been one of Bolivia’s most important tungsten producers. Processing values suggest a tungsten production capacity around 2,500 tonnes of WO₃ annually. (Bernhart, W., 2015, Processing of tungsten bearing ores – mineral processing and metallurgy: Material Science DOI:10.26649/MUSCI.2015.020)
Nyakabingo — Trinity Metals Group (Rulindo District, Rwanda)
Nyakabingo Mine is the largest tungsten producer in Rwanda and one of the most significant tungsten mines in Africa. The operation produces roughly 1,500-1,800 tonnes of WO₃ annually in wolframite concentrate and employs a large workforce drawn from surrounding communities. The mine is operated by Trinity Metals, whose shareholders include the technology-focused investment firm TechMet. Rwanda’s tungsten production forms part of the Central African tin belt and is typically exported as concentrate to international processing facilities in Europe and Asia.
Mt Carbine – EQ Resources (Australia)
Located in Far North Queensland, Australia, EQ Resource is actively recovering ore from one of their open pit mines and processing historical low-grade stockpiles. The operation is a rejuvenation of historical quarries and update of mill processing technology to produce tungsten concentrate. Currently, the operation produces an estimated 2,250 tonnes of WO₃ annually. However, the company has a planned expansion to double processing capacity. Exploration at the site continues today to expand resources.
Dolphin – Group 6 Metals (Australia)
Group 6 Metals have redeveloped this historic open pit mine in Tazmania and brought it back to production in 2023 (the mine has operated since 1917 but closed most recently in 1992). However, the project has been impacted by numerous issues, including poor processing plant recovery, which led to a major refinancing and the Tazmanian government stepping in to support the project. It boasts one of the highest-grade ore bodies of any known Western and allied tungsten deposit at 0.92% WO₃. The has a planned capacity to produce an average of 2,400 tonnes of WO₃ annually
San Alberto – Mining Contractors De Mexico (Mexico)
Discovered in the 1950s, this small-scale operation in Northern Mexico has been intermittently producing tungsten concentrate since the 1980s, and steadily this decade. The company currently produces on average 120 tpa of concentrate, selling it to a European buyer.
Kara Mine – Tasmania Mines (Australia)
This iron ore mine in Tazmania produces small quantities of scheelite tungsten concentrate as a byproduct of its magnetite production. The mine has been productive since 1978 and has an additional planned mine life of over 25 years. When active, the mine has historically produced less than 50 tpa of tungsten in concentrate form.
Sangdong — Almonty Industries (South Korea)
Sangdong began initial mining operations in late 2025 and ramping up to a production target of 2,300 t WO₃/year. Processing plant operations have since commenced in June 2026. Financing for the project was secured through a US$75.1 million loan from Germany’s state-owned KfW IPEX-Bank. Austrian industrial group Plansee separately provided a 15-year offtake agreement with a floor price of $235/mtu of WO₃. (Almonty, Sangdong Mine – Project Update and Third KfW Drawdown, 15.11.2022) An expansion to 4,300 t WO₃/year is possible by 2027, which would make Sangdong the single largest tungsten mine outside China.
Expanding Western and Allied Supply to Meet Demand
Figure 1 showed that despite these current operating mines, there is a tungsten supply gap of ~19,000 tonnes for 2026 and 2027 indicating that new mines must come online in the immediate future to support key industries. The projects below represent the most credible near-term additions to Western-accessible tungsten supply, but even still, their combined output falls short of projected demand growth.
Hemerdon — Tungsten West (United Kingdom)
Located in Devon, UK, the Hemerdon project is a brownfield open-pit project targeting 3,320 t WO₃ annually (2630 t W/year). The project is the furthest advanced in Europe in terms of permitting, with all major permits in place following the mine’s previous operating life, which ended in 2018 when it was shuttered by the previous owner. Tungsten West is currently in the financing stage, seeking approximately $93 million in project capital to recommission the operation, with a targeted start date of 2026. The combination of a permitted site and established infrastructure makes Hemerdon one of the more credible near-term European supply additions.
El Moto — Abenójar Tungsten (Spain)
El Moto is the highest-grade and largest undeveloped tungsten deposit in the EU with a target production rate of 3,084 t WO₃/year (2445 t W/year). The project carries gold as a meaningful by-product, which improves project economics and helps underwrite financing. Like Hemerdon, El Moto has full permits in place and has completed a Definitive Feasibility Study, but remains in the financing stage, seeking approximately €150 million in construction capital with a 2027 targeted start.
Los Santos — Almonty Industries (Salamanca Province, Spain)
Los Santos Mine is an open-pit scheelite skarn deposit located about 50 km southwest of Salamanca in western Spain. The mine has been in planned care and maintenance since 2020 but is awaiting permits to process tailings. Yearly historical outputs yielded approximately 2000-2300 tonnes of tungsten concentrate, which amasses to around 1300-1500 tonnes WO3/year.
Ssangjon – Pure Tungsten (South Korea)
Formerly operating underground mine, located 40 km away from Sangdong, being redeveloped alongside a nearby concentrator plant in Hupo. The mine has a grade of 0.46%, putting it above average relative to tungsten projects worldwide. Ssangjon is aiming to produce 1000tpa WO3 (793 t W/year) in concentrate starting in 2026.
Borralha and Vila Verde – Allied Critical Metals (Portugal)
The Borralha and Vila Verde are both brownfield projects. An experimental mining license has been approved for the Vila Verde project and the Borralha project is currently the Environmental Impact Assessment licensing process. Recovery from legacy tailings from the Vila Verde project will generate near-term cash flow for project development and construction. Allied Critical Metals signed an LOI with Global Tungsten & Powders (USA) for sale of concentrate. Recently, the Borralha project was endorsed by idD Portugal Defense, designating it a project of strategic national importance.
Mactung – Fireweed Metals (Canada)
Mactung is the world’s largest high-grade tungsten deposit that straddles the Yukon-Northwest Territories boundary. Fireweed plans to develop a underground mine and mill that can support 2,000 tonnes per day processing capacity towards production of a tungsten concentrate. In 2024 Fireweed Metals was awarded 15.8 million by the DoW under Title III of the DPA to advance the project to a Final Investment Decision.
Sission – Northcliff Resources (Canada)
Sission is a tungsten-molybdenum mining project located in New Brunswick. The project has received US$5.82 million in funding from Natural Resources Canada and US$15 million from the DPA Title III grant to help advance the project in support of the cost for the update of the Feasibility Study and continued engineering. The project is federally approved and was named a nation-building priority project by Canada’s Major Project Office. Northcliff Resources expects to conduct engineering designs and address provincial environmental impact conditions to make a FID in the coming years.
IMA – American Tungsten (United States)
Initially operating as a silver mine in the late 1880s, tungsten was first recovered at the IMA mine in 1911 with production continuing until 1957. Over the decades, several attempts were made to rehabilitate the mine and expanding exploration. American Tungsten plan to initially recover tungsten-molybdenum-silver from high-grade legacy tailings before restarting full underground operations. Initial production is scheduled for 2027.
Additionally, there are several more projects across North America, Europe, and Central Asia, including Pilot Mountain (USA; Guardian Metal Resources), Springer (USA; Blue Moon Metals), Redmoor (UK; Strategic Minerals Plc), Sautbay (Uzbekistan), all looking to be developed over the next few years.
Looking Ahead: Is More Intervention Needed?
Even if all these projects come online this decade and reach announced capacity, the United States and Europe still could not meet future demand without China-linked supply. Figure 3 shows that a substantial gap remains by 2031. Recent history suggests that it is unlikely new projects will reach production capacity and price volatility will impact operations which could ultimately impact the most strategic supply chains.
The current price environment has improved the economics for Western and allied projects — APT prices are up more than 800% since 2024, driven by China’s February 2025 export controls and tighter mining quotas. But temporarily higher prices will not close the supply gap. Most Western projects sit at the upper end of the cost curve and need prices sustained above roughly $235–250/mtu to stay commercially viable. This is especially true for new projects. They are generally at the higher end of the cost curve and will need prolonged prices above $300 mtu, the average price of the last 12 years, to be economical.
Additionally, the tungsten market has been through this cycle before: a price spike makes Western projects bankable and they begin development and potentially operations, but China responds by lifting quotas and flooding the market until prices collapse and projects are forced to shutter. China’s low-cost producers can keep operating at price levels that wipe out higher-cost Western mines, and they have repeatedly shown the willingness to do exactly that when a competitor nears production. This the main strategic vulnerability that is difficult for the market and governments to solve.
However, the Almonty–Plansee offtake agreement at the Sangdong is an example of how the supply chain is attempting to derisk investments and support mines survive periods of depressed prices. Plansee, an Austrian group with direct end-use demand for tungsten, committed to a 15-year offtake with a $235/mtu floor for production from Almonty’s Sangdong mine. The agreement helped unlock a debt facility from KfW as it hedged against price volatility.
This mechanism could be replicated by either private sector companies in the supply chain or from the government to help close the supply gap. This form of government support would mirror the public support offered to mines in the 20th Century and offer Western mines a “security premium” to ensure they are able to begin operations and remain online during periods of price volatility. Government led price support could come through a contract-for-differences scheme or offtake agreements at a set price. The U.S. government has used both tools to support rare earth supply chain projects. Support could also in the form of a tariff as discussed in the potential plurilateral trade agreements. Regardless of the final form of policy intervention, the main lesson from the tungsten market in the 20th century is that intervention is required to reduce the supply and demand gap currently threating the United States and Europe. But one key issue for governments to decide on is the level of dependency they are willing to accept. If a “security premium” was targeted solely to defence related demand, price support mechanisms would be aimed at Western projects lower on the cost curve and could be implemented alongside offtake agreements. However, mechanisms will need to support projects on the higher end of the cost curve if policymakers believe Chinese dependency also risks other industrial applications and the wider economy.
In the near-term, aside from imports of intermediatory tungsten products, secondary tungsten is a another major source of United States tungsten supply. Since 2025, Chinese traders have been aggressively buying up U.S. tungsten scrap, driving up scrap prices 350%. Buyers have approached long-standing U.S. suppliers directly, outbidding domestic recyclers by offering premiums up to five times normal market price. Government intervention through export restrictions is necessary to preserve domestic supply. Similar policies to the European Commission’s REsourceEU plan to restrict export of e-waste, rare earth permanent magnets, and waste Li-ion batteries (including black mass), the government intervention through the enacting of policies to prevent export of Defense materials is necessary.
