The Great Tungsten Crunch 📉

Strategies in warfare and chess are remarkably similar; sometimes you sacrifice one piece to make the enemy lose two.

This is exactly what the Allied powers did during the Second World War.

At the height of the war, Nazi Germany had become dangerously dependent on a single mineral: wolfram, known today as tungsten. It was the hardener inside tank armor, the tip of every armor-piercing shell, and soon became the backbone of Germany's industrial manufacturing.

And the bulk of its wartime tungsten supply came from neutral Spain and Portugal. Portugal alone exported more than 2,000 metric tons of wolfram to Germany annually between 1941 and mid-1944, while Spain supplied roughly another 1,100 metric tons a year. 

The Allies understood that Germany's military strength depended on this supply.

So, instead of targeting German factories and transport routes, the US and UK moved to choke off Germany's access to tungsten itself.

The U.S. and UK bought massive quantities of Spanish and Portuguese tungsten not because they needed it, but to starve the German war machine of one of its most important raw materials.

The end result: Tungsten prices skyrocketed. 

In 1938, according to estimates, wolfram prices in Spain were still relatively low at around $300 to $400 per ton. By 1943, after Germany, Britain, and eventually the United States had begun competing aggressively for tungsten, the prices had surged to roughly $10,000 to $16,000 per ton. 

Now, nearly eighty-three years later, tungsten is back in the spotlight, and its prices are rising once again, partly because of another conflict, this time in the Middle East.

The European benchmark price for ammonium paratungstate — the key intermediate from which tungsten metal is made — has surged from under $350 per metric ton unit to over $2,250 today, a rise of 557%.

But conflict alone does not explain the price surge. The U.S.-China trade war, a single-country monopoly over this crucial mineral, rising military demand, and the growing use of tungsten in semiconductors, aerospace, and advanced manufacturing are all pushing tungsten prices higher.

But to better understand all of this, we first need to understand the metal itself. So, let’s begin there. 

In the 16th century, tin smelters in the Ore Mountains of Central Europe encountered a stubborn, heavy ore contaminating their furnaces. They called it "wolfram" — from the German phrase wolf rahm, or "wolf's foam" — because they believed it devoured tin ore like a wolf tearing through prey. 

This was tungsten, although the metal itself had not yet been isolated.

The metal itself was only discovered in its pure form in 1783, when Spanish chemists Juan José Elhuyar and Fausto Elhuyar successfully extracted tungsten from wolframite ore for the first time. And that old Germanic name survived, which is why tungsten's chemical symbol on the periodic table is not T or Tu — it is W.

However, it then took nearly 120 years for tungsten's strategic importance to emerge in the early 20th century as the world industrialized and warfare became more technologically advanced.

But why did the world become so obsessed with tungsten? It all came down to the metal's extraordinary properties.

It could withstand extremely high temperatures, was incredibly hard and dense, and made other metals much stronger when added to alloys. That made it essential for armor, armor-piercing shells, aircraft engines, industrial machinery, and the cutting tools used to shape steel itself.

Its value became so great that it even became the subject of patent battles. In 1928, a U.S. court rejected an attempt by General Electric to patent tungsten. These lucrative properties of tungsten triggered a mining boom across the Western world, and the U.S. was no exception. 

It was the Second World War that made the U.S. realize just how strategically important tungsten was. This led Washington to expand domestic mining, secure overseas supply, and eventually build stockpiles of the metal.

The U.S. ramped up production from mines in states like California, Nevada, Idaho, and Montana. The Pine Creek mine in California and the Yellow Pine/Stibnite district in Idaho became some of the country's most important wartime tungsten sources.

Between 1941 and 1945, the Yellow Pine/Stibnite district in Idaho produced 831,829 twenty-pound units of tungsten trioxide, making it the single largest wartime tungsten producer in the United States. During those years, it supplied roughly 40% of total U.S. domestic tungsten output.

The mine was considered so important that after the war, the U.S. Munitions Board reportedly stated that “the discovery of tungsten at Stibnite, Idaho, in 1942 shortened World War II by at least one year.” The Yellow Pine mine produced tungsten worth $53.5 million over its wartime life — all known high-grade ore was exhausted by the end of 1945. 

The U.S. also moved to build long-term strategic reserves. 

Since the 1940s, Washington has maintained a National Defense Stockpile to ensure reliable access to critical minerals during national emergencies, and tungsten has been part of it. 

According to a 2001 United States Geological Survey report, the U.S. National Defense Stockpile held more than 37,000 tons of tungsten in various forms before the end of the Cold War, including ores and concentrates, ferrotungsten, tungsten metal powder, and tungsten carbide powder.

Then came the blow. 

In 1962, President John F. Kennedy ordered a full review of the National Defense Stockpile. What the review found was striking: the stockpile had ballooned to $7.7 billion worth of materials — roughly $3.4 billion more than officials believed the U.S. would realistically need in a wartime scenario.

Washington’s stance began to change after this. 

The review led to an immediate halt in most new mineral acquisitions and a shift toward identifying “surplus” materials for sale on the open market. Tungsten was seen as one of the biggest excess holdings, and over time, the government began steadily liquidating its stockpile.

On one side, the government was shrinking its tungsten stockpile. On the other hand, domestic mines were going out of business. 

The first of the troubles began underground. 

America's richest tungsten deposits had already been mined hard first during the First World War, then again during the Second World War, and once more during the Korean War in the early 1950s.

By the 1970s, much of the easy ore was gone.

At places like the Pine Creek mine in California, operators had to dig deeper every year to find tungsten concentrations worth extracting. What remained was lower-grade ore — the kind that required more blasting, more processing, more water, and more energy for every usable ton of metal produced.

Then came the second problem: demand from the federal government began to disappear.

For decades, the federal government was effectively the biggest and most reliable buyer of American tungsten because of the National Defense Stockpile and military procurement needs.

Once Washington stopped buying aggressively — and began selling stockpiled tungsten instead — many domestic mines lost their largest customer almost overnight and ceased operations. 

Then came the environmental issues.

In 1970, Congress passed the Clean Air Act, subjecting mine operations to federal air emissions standards for the first time. Two years later, the Federal Water Pollution Control Act of 1972 — better known as the Clean Water Act — required mining companies to obtain federal discharge permits, meet strict water quality limits, and in some cases, achieve zero discharge of pollutants into waterways. These regulations made it difficult for companies to manage the mines. 

These factors had a devastating impact on tungsten mining in the U.S. The numbers tell the story: U.S. tungsten production peaked at 5,326 tonnes in 1970. By 1994, it had fallen to just 50 tonnes. By 2000, the USGS recorded zero. According to the U.S. Geological Survey, tungsten has not been mined commercially in the United States since 2015.

But the biggest blow to American tungsten production came from China, which flooded global markets with cheap tungsten and drowned American mines in a wave of low-cost competition they simply could not survive.

Let's break down how Beijing pulled it off.

The story of tungsten is intertwined with the history of modern China. 

It begins in 1907, when a German missionary named Wilhelm Lidorf discovered wolframite ore at Xihuashan Mountain in Ganzhou, a city in the southern reaches of Jiangxi province.  Within a decade, that obscure mountain became one of the most important places on earth. 

The First World War had broken out in Europe, and every major power suddenly needed tungsten for the machinery of modern industrial warfare. And all roads led to Ganzhou. By 1918, the region was producing more than 10,000 tons of tungsten ore annually — 60% of the entire world's supply — just eleven years after the metal had first been identified there.

By the 1930s, tungsten was not just used in wars outside China's borders. It was funding a revolution within them.

In the 1930s, as the Chinese Communist Party came under growing military pressure in Jiangxi, it turned to the region's rich tungsten deposits to survive. Mao Zemin established the China Tungsten Ore Company in Xihuashan, in Jiangxi province, to turn the region's tungsten deposits into a financial lifeline for the Communist movement.

The Chinese Communist Party used tungsten exports to buy medicine, weapons, and other necessities needed to sustain its fight. A few years later, it was from Ganzhou that the party launched the Long March — the historic retreat that would later become one of the defining symbols of Communist China.

When Mao founded the People's Republic in 1949, he did not forget the ore. The tungsten mines of Ganzhou were among the first industries that were taken under state control, regulation, and strategic ownership.

What followed was the most deliberate industrial buildout of a single mineral in modern history. 

Despite being one of the world's biggest tungsten producers before 1949, China had very little capacity to process the metal itself. Raw concentrate was exported overseas, processed abroad, and often returned as finished metal products. That changed first. 

With direct technical assistance from the Soviet Union, Beijing began constructing the processing chain from the ground up. The Zhuzhou Cemented Carbide Plant — built with Soviet blueprints and Soviet engineers — became the first major tungsten smelting enterprise in China. 

The second phase began with Deng Xiaoping's reform and opening-up policies in 1981. With state backing now combined with market incentives, production accelerated. China shifted from being a raw-material exporter to a producer of processed tungsten goods — carbide tips, tungsten powder, and ammonium paratungstate.

It was during this period that the Chinese tungsten industry overwhelmed the global market.

Chinese producers flooded the world with low-cost tungsten — not as a loss-making exercise, but as a deliberate strategy to build market share, undercut Western rivals, and eventually force many foreign producers out of business.

From 2000 onwards, Beijing began treating tungsten not just as a commodity, but as a strategic asset. China introduced production quotas, tightened control over mining, and invested heavily in new processing technologies to extract tungsten from lower-grade deposits that other countries considered uneconomical.

While the West stopped investing in tungsten altogether, China continued refining its methods for mining, processing, and dominating the market.

In short, China spent decades monopolizing the mining and processing of one of the world's most strategic minerals. In the process, it turned tungsten into a geopolitical weapon it could wield when needed.

And in 2025, that moment arrived.

On February 4, President Donald Trump imposed a blanket 10% tariff on all Chinese goods entering the United States.

Beijing retaliated within hours. Not just with tariffs alone, but with something far more precise: export controls on five critical minerals, including tungsten.

Under the new rules, Chinese companies could no longer freely export tungsten products. Anyone selling tungsten concentrate, ammonium paratungstate, tungsten carbide, or finished tungsten metal abroad is now required to obtain individual export licenses from China's Ministry of Commerce.

That changed the market overnight. The old quota system at least gave buyers some predictability. The new licensing system created uncertainty. Exporters no longer knew whether licenses would be approved, how long they would take, or what quantities they would cover. Buyers had no reliable way to plan supply chains.

The impact was immediate. Chinese ammonium paratungstate exports fell from 782 tonnes in all of 2024 to just 243 tonnes in the first eleven months of 2025 — a drop of nearly 70%.

And prices followed. At the start of February 2025, benchmark tungsten prices were below $400 per metric ton. By October 2025, tungsten prices had already climbed above $600 per metric ton. 

Then came the Trump-Xi trade truce in late 2025. Markets hoped tungsten would be included in the reprieve. It was not.

Yes, the export controls pushed prices higher globally, but conditions inside China made the squeeze even worse.

Beijing had already cut its 2025 tungsten mining quota by 6.5%, while many Chinese mines were dealing with declining ore grades as high-quality deposits became harder to find.

The average grade of China's tungsten ore has fallen sharply over the last two decades, meaning miners now have to process far more rock to produce the same amount of metal. At the same time, stronger domestic manufacturing, tighter environmental rules, low inventories, and traders holding back supply added even more pressure to the market.

The tungsten supply has been constrained for years, but demand has only continued to rise, and wars have made the squeeze even worse.

The war in Iran has added another layer of pressure to an already tight tungsten market. Tungsten is used in armor-piercing shells, missile components, aircraft counterweights, anti-drone ammunition, and other military systems. Every missile fired and every shell used burns through more of the world's tungsten supply.

That matters because Western stockpiles were already low before the war began. Years of conflict in Ukraine had already pushed up demand for munitions, and the fighting in Iran only accelerated the drawdown. According to Project Blue, a market intelligence platform that tracks critical minerals supply chains, tungsten demand tied to defense applications is expected to rise by another 12% this year,

At the same time, tungsten used in weapons is effectively gone once it is fired. Unlike industrial tungsten, which can often be recycled, military tungsten is usually destroyed or scattered on the battlefield. That means every month of conflict creates fresh demand for replacement material. 

But military use is only one side of the story. 

Tungsten is also essential in semiconductors, where tungsten hexafluoride is used to form the fine metallic connections within advanced chips. It is widely used in aerospace for turbine blades, engine components, and aircraft balancing systems, while manufacturers depend on tungsten carbide cutting tools to shape steel, aluminum, and titanium.

Add solar panels, EVs, heavy machinery, and industrial tooling to the list, and the result is a metal facing rising demand from almost every strategic industry at once. Interestingly, tungsten, because of its unique properties, is almost impossible to replace in any of these sectors.

This classic supply-demand squeeze has turned tungsten into one of the world's most contested metals. Prices have surged roughly 557% over the past year, hitting their highest level in more than eight years.

But it is not just rising prices that worry the West. It is China's overwhelming dominance of the tungsten industry itself.

The U.S. and its allies are now realizing that they do not just depend on China for cheap tungsten — they depend on China for the mining, processing, and refining of one of the world's most strategic metals.

Washington has now started responding. 

In many ways, the U.S. is now trying to rebuild the same tungsten reserves it spent decades selling off after President John F. Kennedy's 1962 stockpile review.

For years, Washington assumed global markets would always provide cheap and reliable access to critical minerals. That assumption no longer looks safe.

Now, the stockpile is coming full circle.

The Defense Logistics Agency has issued requests for 1,715 metric tons of tungsten ores and concentrates for the National Defense Stockpile, while the Department of Defense plans to spend up to $1 billion on critical stockpile materials in 2025.

New tungsten projects have already begun emerging across the U.S., including Guardian Metal Resources' Pilot Mountain and Tempiute projects in Nevada, Patriot Critical Minerals' MEGA deposit in Nevada, and American Tungsten's IMA mine in Idaho.

A more recent example is Almonty Industries, which is establishing a major tungsten mining operation in Beaverhead County. The company plans to restart production at the Gentung-Browns Lake project as early as late 2026 and has already relocated its corporate headquarters to Dillon to accelerate Western-aligned tungsten supply chains focused on high-grade scheelite deposits.

Another critical step is not just increasing mining or stockpiling — it is reducing dependence on Chinese tungsten altogether.

From January 1, 2027, the Department of Defense will prohibit military procurement of tungsten that has been mined, refined, separated, melted, or produced in China, Russia, Iran, or North Korea. That means contractors supplying the Pentagon will need to find alternative sources for tungsten powders, heavy alloys, and finished components. 

Interestingly, the U.S. is not just looking for tungsten within its own borders. It is also seeking allies abroad to help build a non-Chinese supply chain.

One of the clearest examples is Kazakhstan.

In late 2025, a U.S.-backed group led by Cove Capital signed a deal with Kazakhstan's state mining company to develop the Northern Katpar and Upper Kairakty deposits — two of the largest undeveloped tungsten resources in the world.

The project is expected to attract around $1.1 billion in investment, with up to $900 million in potential support from the U.S. Export-Import Bank. Under the deal, supplies will prioritize U.S. government and commercial needs, giving Washington a new source of tungsten outside China.

Yes, the destination seems clear, but the path will be difficult. 

Opening a new tungsten mine can take anywhere from 10 to 15 years from discovery to production. Companies need permits, environmental approvals, financing, processing plants, roads, water access, and long-term buyers before a mine can even begin operating.

And mining is only part of the challenge.

It has been more than a decade since the U.S. last produced tungsten commercially. During that time, China kept mining, refining, processing, and improving its technology. Chinese firms learned how to process lower-grade ore, built dominant positions in ammonium paratungstate and tungsten carbide, and created an industrial ecosystem that few countries can match.

The West can build alternative supply chains. Mines in the U.S., Kazakhstan, Canada, and Australia can help. Stockpiles can buy time.

But rebuilding an industry that China dominated for decades will not happen overnight.

And that is exactly why tungsten has become one of the most strategic minerals of the 21st century.

This newsletter was written by Shyam Gowtham