North American Tungsten Corporation Ltd (NATUF)

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Tungsten Market rebalancing

http://finance.yahoo.com/news/tungsten-market-looks-rebalance-2017-110000615.html

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Tungsten Market Looks to Rebalance in 2017

LONDON, January 20, 2017 /PRNewswire/ --

For the last 20 years China has been the world's largest consumer of tungsten. Over this period its share of world tungsten use has increased substantially; from just under 30% in 1996 to nearly 60% in 2016.

(Logo: http://photos.prnewswire.com/prnh/20150909/264974LOGO )

Chinese consumption has continued to grow in the face of contracting markets in the rest of the world. The country's tungsten use increased by nearly 8%py between 2008 and 2016, but it was the only main consuming country to record growth, with the exception of Russia. As a result, world consumption grew by around 3%py over the period, reaching just over 100,000t contained W in 2016.

Chinese tungsten supply has also grown in line with its consumption. The country is the main producer of primary tungsten, accounting for just under 80% of output in 2016, and also contributes a few thousand tonnes per year to secondary tungsten supply. Very little mine output is exported (<1,000tpy contained W) and domestic mine supply is supplemented with imports, generally in a range of 2,000-5,000tpy of contained W.

Instead, China has focused on increasing its exports of value-added tungsten products. The proportion of exports accounted for by the main intermediate, ammonium paratungstate (APT), has decreased since 2008 along with exports of tungsten products such as oxide and metal. Meanwhile, production and export of goods such as mixed metal carbides and cemented carbides has increased as the country has repositioned itself as a supplier of higher value tungsten products to the world market.

New tungsten supply

New mine developers have looked to offer a non-Chinese alternative to the tungsten concentrates market. A significant producer is Vietnam-based Nui Phao Mining Company, a subsidiary of Masan Resources, which began full commercial production from the polymetallic Nui Phao project in March 2014. Nui Phao produces tungsten, fluorspar, bismuth and copper, with output in 2016 estimated at 4,300t contained W. Tungsten output from the mine is sent to Masan's 51% owned subsidiary, Nui Phao - H.C Starck Tungsten Chemicals Manufacturing, which began operations in 2015. Capacity of the plant is 6,500tpy WO3 and the facility can produce APT, tungsten blue oxide and tungsten yellow oxide.

Elsewhere in the world, Australian-headquartered Wolf Minerals commissioned the Drakelands tungsten-tin mine at Hemerdon in Devon, UK, in 2015. Nearly all mine output from Drakelands is exported; Wolf has offtake agreements with Global Tungsten & Powders of the USA and Wolfram Bergbau in Austria that account for 80% of mine output.

There are tens of tungsten mine projects currently under development and in the period to 2026, Roskill expects that more than 10,000tpy (contained W) will be successfully brought online. Most projects are focused in Australia, Spain and Canada, and if all come to fruition then the landscape for primary tungsten supply could shift to much higher contributions from Oceania, North America and Europe.

One such developer is Canada-headquartered Almonty Industries, which has undertaken a series of acquisitions since listing on the TSX Venture Exchange in September 2011. In 2011, it purchased the Los Santos tungsten mine in Spain from Heemskirk, followed by the Wolfram Camp mine in Australia in September 2014, Woulfe Mining Corp. (which holds the Sangdong project in South Korea) in September 2015, the Panasqueira mine in Portugal in January 2016, 51% of the Valtreixal project in Spain in June 2016, and the remainder of Valtreixal in January 2017. Almonty produced an estimated 1,350t (contained W) of concentrates in 2016 and its Sangdong and Valtreixal projects have the potential to add another few thousand tonnes to global primary tungsten output in the coming years.

Finally, one of the more advanced tungsten mine projects currently under development is the Barruecopardo project in Spain, operated by Saloro SLU - a subsidiary of Barruecopardo JV (70% owned by Oaktree Capital Management and 30% by Ormonde Mining). Saloro is targeting production of 2,600tpy of WO3 (2,050tpy contained W) over an initial nine-year mine life, starting in 2018.