Things are happening in the tungsten market that should have a positive impact on the prospects for the W Resource business.
China is the dominant player in the market producing 84% of the worlds supply.
China is trying to address the slump in the price by taking the following steps:
- China state reserve bureau is looking at purchasing 10,000 tonnes of tungsten concentrate.
- Eight tungsten producers are cutting tungsten concentrate output by 20%.
- Some tungsten producers in China have stopped supplying the market.
These measures will probably result in China’s tungsten prices increasing.
Cantung mine in Canada has stopped production. The mine had operational costs of c$200 per mtu making the mine unviable due to the current tungsten price.
Four other mines have tungsten operational costs that are higher than those at Cantung.
La Parrilla operational costs will be $117 per mtu. With analysts predicting in a worst case scenario that tungsten prices could drop to c$175 / mtu the La Parrilla mine at this price level would still be viable.
Upward pressure will be put on tungsten prices due to the China influence and overall production reducing.
This is all good news for W Resources. The start of production at La Parrilla will probably coincide with an upturn in the tungsten price.