De l'or ... dans le tungstène ?? (6)

par alatan, jeudi 14 juillet 2005, 15:39 (il y a 7054 jours) @ alatan

TUNGSTEN COMMODITY TERMINOLOGY

Tungsten ore is called "concentrate." By weight, concentrate is roughly two thirds WO3 (tungsten tri-oxide) and one third impurities. Concentrate is typically priced per tonne of contained WO3 (tungsten tri-oxide) or per MTU (metric tonne unit). An MTU is 1% of a tonne of contained WO3. One MTU of concentrate grading 70% thus contains 10kg of MO3 and weighs 14.28kg. A metric ton contain 100 MTUs. In the U.S., one also sees the STU (short ton unit), which is about 9/10 of an MTU.

Refineries remove the impurities and convert the WO3 into APT (ammonium paratungstate). APT is also quoted per tonne or per MTU. Concentrate pricing is somewhat lower than the APT pricing (typically by 10% to 20%, or 10$ to 20$ per MTU), which takes into account the tolling fee for refinement. The Panasqueira concentrate is of exceptionally high quality (grading above 70%) and has traditionally traded somewhat higher than the market concentrate price.

TUNGSTEN COMMODITY HISTORY

Over the last two decades, the US and FSU countries have disposed of their large tunsgsten stockpiles accumulated during the cold war. Russian mines and refineries have massive potential, but the industry is disorganized. Most mines are closed, operating at low levels, or surviving by non-mining activities. Increasing mine production would require significant investment. There is currently no North American production, although a large Canadian mine should soon reopen. The U.S. government has disposed of most of its surplus tungsten inventory, although there remains roughly one years worth of world production (or 3 years of U.S. needs).

The Chinese government has steadily reduced the export authorization for tungsten ore and APT and encouraged concentration of authorized miners. However, until recently, wildcat mining and illegal export have made shams of government plans. The central government has apparently succeeded in shutting down most illegal mines. Production at some large mines has suffered due to electricity outages -- this production could come back online. Minmetals (Noranda's recent suitor) now controls over a third of the approved tungsten mining industry.

Over the last 15 years, APT prices have hovered near $50/MTU. Last year the price moved up to $100/MTU. The current price is nearly $300/MTU.

The most thorough discussion of tungsten pricing and Chinese strategy that I have seen was published in May 2004 by a French ministry [1]. I will briefly summarize its conclusions:
A supply crisis seems unlikely in the short term. [My note: the unlikely has occurred!] However, it is a legitimate concern over the long term, because:
1) A reduction in Chinese exports is possible. In this case, prices could reach $250/MTU. It seems that at least two years would be necessary to replace Chinese exports by starting up alternative mines outside China.
2) The effect is even stronger because the market has become rigid. The loss of small mines in China, Latin America and Africa means that the "flexibility" they once brought to the market no longer exists.
3) A critical situation would arise if Chinese exports were lost during an important conflict, because of the importance of tungsten in weapons systems.
4) The principal unknown is the state of Chinese reserves and resources.

TUNGSTEN SHORTAGE

Supply and demand are high imbalanced even inside China. I have heard that some Chinese concentrate users have looked into (illegally) importing concentrate into China! This is a drastic turnaround from China's previous role of concentrate supplier to the world. In the U.S., the National Association of Manufacturers warns of impending layoffs due to the tungsten shortage. Legislation is being prepared to permit a possible four-fold increase in tungsten sales from the National Defense Stockpile (NDS) during FY2006 (equivalent to a year's domestic usage). However, FY2005 NDS releases have been completed. Under current legislation, new NDS releases will not be possible until October.