Welcome. In just a short moment or two, we'll be starting with the final panel of the 43rd Annual Global Metals Mining and Steel Conference. We're joined today by two voices with deep insight into the global tungsten market and the critical mineral supply chain. First, we have Mark Seddon from Argus Media, one of the industry's leading authorities on commodity markets and pricing intelligence, and alongside him, Lewis Black, whose company, Almonty Industries, is rapidly becoming a key Western supplier of tungsten at a time when supply chain security has never mattered more. Please join me in welcoming Lewis and Mark. Gentlemen.
Oh, that's not live.
Welcome to Miami.
All right. Thank you.
Welcome to Miami.
Boom.
Okay. Where I wanted seven start was just on the market today. I think there's been some extraordinary things happen in the market. I think it would be helpful for each of you to frame the tungsten market today in terms of how it feels now versus past cycles, and you both certainly have the experience and qualifications to weigh in on that. Lewis, do you want to start?
Well, no, you know what? I'd like Mark to start because, you know, he's a voice of authority. I'm just merely a CEO.
Sounds perfect.
Let's start with the authority, and then we'll move over to the CEO.
I'm not sure about that. Thank you very much. Yeah, I mean, I think the big difference. We're in an unprecedented situation in tungsten. Tungsten prices are 7- 9x higher than they were 12 months ago and at record levels that we haven't seen ever. I think one of the differences that we've seen with tungsten compared to, say, rare earths, tungsten's also a critical mineral, is that actually the price rise was generated out of China. It was supply tightness in China of concentrate that started the price rise and pushed it forward. You had the export controls on APT oxides and I think tungsten bar, which then sort of added to the, you know, to the upward momentum.
We had the Iran conflict, which as tungsten is used quite significantly in the defense sector, that also pushed the demand side. It all came together to really create this unprecedented situation. I think that's kind of the real key to the current market, I guess.
I'm with him. I think to take it a bit further, question is why? What, what's going on in China? You know, I mean, it's always very difficult to speculate. What we do know is that they engaged upon a policy of reducing and then removing the subsidies to the Chinese mines. They started this program more than five years ago, and I think in 2024 is when they finally cut them. Later last year they took their hands off the wheel of price and allowed for the first time in a generation, tungsten price to trade freely. The question is, why? This is subject to lots of speculation. If I was a betting man, I would say that this is just business in the sense that it's a declining resource. It's very difficult to mine.
It's very difficult to process. There's not much of it, and ultimately the best way to manage any resource is, whether you like it or not, good or bad, is the free market because you have to engage and follow levels of efficiencies and management that you don't see in subsidized mines. Is this just they rip the Band-Aid off and we're just gonna see what happens? This is the question. I've heard speculation they're stockpiling, speculating, fusion reactors, defense spending. There's a 1,000 different reasons, but ultimately what we do know is they cut the subsidies and we saw mines close because of it, and we see them now as a net importer of material, and the question is, why?
The other thing we know is that the price reacted very strongly. To Mark Seddon's point, we're up, you know, seven, 8x versus where we were just a year and a half ago. At current price levels, industry can make a lot of money. How sustainable are these current price levels and what has to happen for these things to sustain?
You can only make a lot of money if you're actually in the business. There's a lot of projects that may come into the business, but at the moment, only the people that are actually in the business can make a lot of money. As for sustainability, it really, again, depends who you ask. If you ask any of my customers, anything more than free is an abomination to them. This idea of ultimately, you use so little of this tungsten in the end process, it doesn't have a meaningful impact on net margin. That's very important. Demand destruction isn't gonna come about through price, it's gonna come through lack of availability. You only use a tiny amount, but you use it across a whole plethora of sectors.
I don't think we really know what tungsten's worth because we've never had any kind of free market visibility on the price for a generation. Where does it settle? There's a price that you can come up with to compensate the Chinese mines for loss of subsidy. Now that China's embarking upon recycling, there's an additional energy cost to factor into that. Is it higher than this? Is it lower than this? Only time will tell. I don't believe it'll ever drop below CAD 1,000 again because if we look at recycling and the cost of recycling, the energy cost component to that, now China's embarking upon that, and that's still 3.5x what we've seen in the last 30 years. Even a total imbecile can actually make money in a tungsten mine at that price.
The question is, at the old prices, if you could make 30%-40% net margin, you were doing great. Now it's, if it's going to be CAD 1,000 and you only make that, you're doing something wrong. Mark, is there any part you disagree with or?
no.
I'm just looking for some disagreements.
No, no. Well, we can disagree on where it could go to. I think, you know, we're seeing a bit of a bifurcation as well. We've seen that in rare earths. I mean, rare earths, the heavy rare earths have gone to, like, 4, 4.5x what they are in China internally. I think the difference in tungsten is actually it was China that was driving the price rises in terms of tightness of supply. I mean, as Lewis said, they removed the subsidies. Most of the mines in China have been operating for 30+ years, the bigger ones. They're mining deeper. Grades have gone down, production costs have gone up. Production costs in China are probably going up faster than they are outside of China.
It's interesting to say about the price that China driving the price. If you look last year, China rose much quicker than it did in the West as the West were eating into inventories. That kind of puts a bit of a lid on it, by the end of October, those inventories had essentially gone and you saw huge jumps in the West. They were really just catching up with what was going on in China.
I mean, we've seen about a 35% drop in tungsten prices in China in the last six weeks.
Well, not according to what I just got from Argus.
Oh, well.
For APT. There's a tug of war going on in China as well. I mean, because ultimately the smaller producers are claiming they can't finance these higher costs and they want money from the government to help them, and the larger vertical guys like Xiamen Tungsten and Minmetals are quite happy with the current arrangement because of the outsized margin they're getting. There's a bit of a tug of war.
Sure. I mean, just going by, you know, our latest assessments so.
Now we're going to disagree.
Well.
It was going to happen.
Well, you can look at.
I'm surprised it took so long.
I mean, you can look on our website and, you know, if I track, because I do a monthly outlook for tungsten. For the last six weeks, prices have been going down in China, particularly for APT and concentrate. They went in our last, the most recent assessment in, on Tuesday, they went down 10%.
Well, Mark, I think an interesting question then is, like, what do you think is driving that and is that sustainable?
Well, I mean, I think, you know, the fundamental situation is changing a bit. They're importing more and more. We can talk about the fundamental situation and it's not just in tungsten. China is investing less in the upstream, so they're quite happy to import concentrate. I mean, in tungsten it's probably more severe because they are struggling to maintain domestic production, and then they don't have a raft of projects come on stream in tungsten. There's one in Jiangxi province, which is due on towards the end of this year, and we've heard of a couple of others that might come on stream in the next two or three years, but that's really filling in a lost production. We don't see much increase, if at all, in domestic production of tungsten concentrate.
They, Jiangxi Copper bought or invested in the Kazakh project, Boguty or Burguta, however you pronounce it, which came on stream mid-last year and is probably exporting about 1,000 tons of concentrate per month to China. Chinese imports of concentrate doubled in 2024. They were another 65% up in 2025, they're already up another I'm not quite sure how much, what the percentage is the first quarter of this year. On that level, the Chinese this isn't a new thing either. In successive five-year plans, they have put in place the policies to preserve resources as much as possible and add as much value to resources. You know, in tungsten that means I mean, they don't obviously export concentrate, but that's less exports of intermediates and more exports of processed products.
If you look at rare earths, it's not exporting separated rare earths, it's exporting rare earth permanent magnets and eventually, you know, EVs and wind turbines and so on.
I'd like to stay on China here. You've opened up a can of worms. China does continue to dominate the supply of the market. Regardless of what's happening to their production today, they're still 75% of global supply. That's changing of course, but today.
They also consume 55% of the world's tungsten.
Looking more broadly, how should market participants interpret China's long-term strategy? Are they prioritizing domestic value add and security of supply, or behaving as a commercial supplier to global markets?
Well, I think you have to look at this in a ecosystem of business. For generation, the margin sat with the downstream as they subsidized the upstream to allow development of domestic downstream production. What I believe is going to happen is that you're never going to see those raw materials return to the West. I think that's gone. What you're going to see now start to arrive in the same hugely efficient, cost-effective, convenient way. Instead of getting raw materials, you can now get finished components downstream, Chinese finished components.
The margin is going to remain now more towards the upstream and away from the downstream because China's going to adopt the same. They're not going to subsidize it, but they're certainly going to approach it with the same convenience that they did with raw materials for a generation. I think this has always really been the end game here. It's always been about providing finished components rather than the building blocks to make them. I think that's going to happen sooner rather than later. Of course, from my customer's perspective, not fantastic news because as they always pointed out, it was always so convenient, China. You could ring a guy in Kansas and there's 1,000 different reasons why something hadn't made a truck. You rang your broker in China, he came back to you within two hours with a price.
You say, "It's not, it's too much." He gives you a 10% discount. It's on a boat by Friday. That's how it worked. It was a generation of an outsized margin that was very convenient. I think China will take the same service approach to finished components, and if you're Ford and you're being told that your normal supplier from, you know, in the U.S., for instance, is delayed because they have raw material issues, but in China they happen to have everything you need for your inserts, "Oh, I'll do it this 1 time." Once you're in, you're in. That's where I think this is, this is going to head.
I mean, yeah, it fits in with their value add policy anyway, they're really focusing as far downstream as possible. That would take you into the inserts and cutting tools, et cetera, et cetera. Yeah, I just think in terms of supply, they're less concerned now about dominating the upstream end. I mean, in tungsten they have the issues with, you know, old mines and so on and conserving resource. I can just see them investing more outside of China, whether it be in Africa or Kazakhstan or whatever.
I think there's another point. They've also reached a point when you've done this for a generation, that the human capital of how to do this is gone in the West. It's not like they've left behind a skilled workforce who have intrinsic knowledge of how to actually mine tungsten, for instance. They haven't. Those mines, apart from two, all went in the early 1990s, everything was gone. It's 30 years. They know to recover from that is going to take a great deal of time. I don't think they're hugely worried about an enormous amount of raw materials coming online to then challenge their downstream, you know, approach. The human capital is often overlooked and neglected.
As we've seen firsthand in the last 20 years, if you don't know how to mine tungsten, you don't learn on the job. It's very difficult, very dense, and very brittle. You will fail. China's done a very good job at decimating that by seeing all of that sector close.
Mark, I wanted to unpack something you said about new supply in China.
You mentioned later this year there is a new mine coming on. I don't think it's particularly large. Some of the ones planned for two to three years from now, again, not particularly large. Do you see that as adding incremental supply in China, or is this just offsetting some of these decrepit mines that are declining?
I think mainly offsetting.
Yeah.
Yeah, whether it fills in all of it, as I say, they're much more comfortable, I guess, importing now. As I say, I mean, Kazakhstan is what? 5,500 tons contained tungsten, so that is a major, you know, major project. You know, Kazakhstan could be a, you know, a supplier of more. We've got Cove Capital in Kazakhstan as well.
Yeah, but-
Uzbekistan. I mean, I'm not saying it's.
No, but the projects in the one that Chinese took was always considered to be the premier project.
Sure
in Kazakhstan. It still took them, even though it's basically a you know, a Chinese-Russian satellite, it still took five years to build. You know, these supply chains take time to come online. If it takes China that long, imagine what it takes us in the West. Yeah, I think it's just replacing what they lost in the subsidies so they I think recycling they're going to be developing, they started last year when they lifted the environmental law. We're going to have to wait five or six years to really bring balance to this market. The recycling will be the key here because they'll mirror what we've done in the West. I don't think they're going to be bringing on more primary. I think they're going to focus their attention now on recycling.
We also had this conversation about the ultimate end goal, and within that there's a really specific question that I just want to hit head on, and that is, what is the risk that Chinese export controls are removed?
On what?
On the export of tungsten.
They'll never remove them on dual-use, and that's the, well, the incredibly creative way that you ban something without actually banning it. If you've used tungsten in everything, how do you actually demonstrate that it doesn't end up in something connected to the military? If you make a braking component, how do you show that doesn't end up in an armored vehicle or a fighter plane? Or you make an insert. You know, it's almost an impossible bar to meet, they've never banned the export. There is no ban. There's a restrictbition saying you can't use it for dual-use, and you have to clearly demonstrate to us that you don't use it for, you know, dual-use applications, which is an almost impossible hurdle to beat. That's not going to change.
The thing is, they're extending it rather than you know, they obviously put it on Japanese companies. They've just announced some European companies, it's not as if they're going in the opposite direction, putting more controls. You know, if we look at the licensing system that they brought in on rare earths, you know, they said, "We haven't, you know, we haven't banned it." To get a license is almost impossible. Practically impossible because the amount of information they ask of the consumer, as in the importer, in terms of commercially sensitive information means that you can't get a license because the consumer isos not going to give out that information. It's a way of banning exports without banning them.
One of the things that we've seen is that exports that are coming out that are being sent to places to make things specifically for China. We see this in South Korea, for instance, in some applications that are produced there and then sent back to China. They will export for that. Those deliveries are getting slower and slower as they build out that capacity in China to replicate it. A bit like, you know when we put up all the sanctions on China and we said you couldn't have any more brie cheese. Brie was banned. The Russians said, "We'll make our own brie." This is really the same philosophy, is that China is actually looking much more inwards.
Anything they can't do right now internally, they're still allowing exports to exist for that as long as it goes back to them, while they build out the capacity to be able to do that themselves.
Okay. Let's extract another idea that you guys have already touched on several times, and that is the Western supply response. Human capital, as you mentioned, Lewis, is a huge issue but, you know, realistically, what are the other big constraints from bringing new projects online and what's the outlook for new supply in the West?
I'll leave that.
seeing as you've brought it up.
There's only lawyers in here. All right. I'm not gonna mention specific projects. Let's keep this very generic. It doesn't matter how, why we, you know, whether we like it or not, we are operating in democracies, and with that comes the wonderful burden of bureaucracy. Even in the U.S. where the federal government's saying, "We must build, build," they still have to communicate at a state level. Still has to be some processing in state. Then you have NGOs, they file frivolous lawsuits, they clog up the docket. It takes some years to get a hearing, gets thrown out, they appeal. There is the problem of speed. Forget about whether half of these projects you're seeing are any good, because a lot of them are just rebadged from what they were in 2011 when we saw the price get to CAD 475.
New names. Not as zippy. There's some of the names back then were fancier. Ultimately, it's a question of how long is this gonna take to do. Processing of permits, the procedure is rigid. There's no way around that. You know, because you can't start trampling over the Constitution whether you want to or not. Also, the other thing to consider is a lot of these brownfields have a great deal of environmental legacy issues that come with them, and no one's really looked at the cost of all of this. They say, "Oh, this time next week I can be open." There's a bloody great big, you know, 60 years of old tails with their acid water and all this. There's all kinds of impact.
We don't mine now as we used to. Trying to take a used to mine and bring it into the now is not gonna be straightforward. Mark, you must have an opinion. You're a journalist.
I do. I'm a journalist.
How dare you?
Oh, sorry. I'm a consultant.
Oh, sorry. Sorry. That's it. That's a new word for journalism.
I mean, Lewis is right. I mean, you know, it takes a long time to get a Western mine off the ground. I mean, there are policies in place, so you've got the Critical Raw Materials Act, which is supposed to make permitting and so on easier. The proof of the pudding will be if that actually comes to pass. I mean, there is a well, quite a long list of projects in the West, but as Lewis says, they've been around, most of them have been around quite a long time. You know, they haven't come on stream previously. I mean, if we're looking at projects that have come on stream, you know, you had Nui Phao in Vietnam, you had Hemerdon in the U.K., which lasted 1 year.
Well, Nui Phao is depleted now.
Yeah. you know, that's in the last, you know, 10 years or whatever.
That makes an interesting point because if you look at a lot of these projects, these brownfields, they existed in the '50s and '60s, and at that time they were a reasonable size because the use of tungsten was a lot less tonnage was being consumed annually. If you're only consuming 50,000 tons a year and you had a mine that could produce 1,000 tons, it was a reasonable size mine, now we're producing 3x th at. These mines are all quite small as well, and they have to now be reinterpreted to attract capital by saying, "We can be much bigger," but the resource itself doesn't support that. This is going to be a rocky road.
I'm gonna pick that up and then turn this conversation to demand. I get the focus on supply, that's what kicked this off, but I mean, there are some really extreme shifts happening in demand as well. Where do you see the biggest changes in demand in the last two to three years and how do you see that continuing going forward from here?
I mean, the focus is probably on defense. I mean, the largest end use by demand is still the automotive sector, it's currently 20%-22%, something like that. Defense is probably around 10%, give or take. If we're looking, you know, medium to longer term, you see the growth in the defense sector, given geopolitical situation, wars, et cetera, we're consuming munitions and so on at a vast rate. That needs to be replaced. You also have the drive to spend more GDP on defense, which is being pushed by various, you know, not just by the U.S., but also. That's a more long-term growth factor I guess. If you look at the automotive industry, actually automotive consumption of tungsten is probably declining.
Quite slowly, still declining because of the advent of EVs. For a full battery electric vehicle, there's no gearbox, so you don't need to machine the gearbox, which is probably the main use of tungsten.
But then hybrids-
Hybrids is still-
Use a lot more than.
Well-
Than a regular vehicle because of the additional gearing.
Yeah. I mean overall, I mean, we're only forecasting a sort of 0.5%- 1% decline in demand, so it's a longer term thing. If you look at our demand, long-term demand projections, we expect the defense sector to overtake the automotive sector as the largest consumer of tungsten by the mid-2030s.
Well, I think also you should mention that because availability of components from China has also declined, demand has increased in other areas that can no longer procure from their normal sources. It's also had an outweighed effect on Western demand. Ultimately, tungsten use isn't declining because there's always new applications. I mean, as a case in point, five years ago if someone talked about tungsten hexafluoride, they would've said, "You're out of your mind," and yet that now is a key component of semiconductors, which has almost initiated this whole AI revolution. Defense is gonna be impactful, but we don't really know the impact yet because a lot of the output capacity of these defense prime companies is not complete.
If you look in Korea, it shot up the defense rankings because they had a additional capacity, because they were on a theoretically still at war with North Korea, so they have by law to have that additional capacity. They were the only ones really who could produce more for, say, Ukraine. You know, as the defense prime additional output capacity comes online, we're gonna see another, you know, major supply squeeze event because supply is not getting any easier in the West in the next 36, 48 months at the earliest.
Can you help frame the magnitude of what's going on defense just in the last year? You know, 8% of global demand at the, at the beginning of this decade was defense. I mean, we think it's approaching 15% last year. I mean, where are you seeing it going in terms of % of total demand, but also, like, what are the actual volumes we're talking about?
I mean, I don't have it as high as 15%, but it is going in that direction, and I think there's the short and long term. The short term is obviously current wars, et cetera, which is consuming munitions and so on. You have the longer term in terms of, if you're using it in ships and ship building and so on and so forth, which is a much longer lead time. Then you have the defense spending aspect, which is again, a longer term. I mean, it's all pushing it in, as I say, we expect tungsten, defense to be the largest consumer of tungsten by mid 2030s at the latest.
What would that be in terms of a % of?
Oh, gosh.
particularly given the last-
Off the top of my head, I mean, well, it would take it towards the sort of 20%, I guess.
Yeah, that's big.
Something like that, yeah.
That's a big increase.
The question is this being replicated in China? That's the other, you know, speculation.
I mean, China is a big defense spender, so you would imagine that they're using, you know.
If one is doing it-
the same way
is the other also.
Yeah.
Defense will be a big driver. To be fair, defense has been, you know, much neglected really since the fall of the Cold War. You know, all stocks have been sort of run down. They haven't been important. This is a lot of catch up, as well as the fact that we, you know, we keep getting involved in various, you know, events. I think defense is an important part, but I also think there's a lot of work being done in the technology side, which is also very innovative. Maybe not as demanding in terms of actual consumption, but equally important to activity as we're trying to replicate it here in the West.
A topic which the two of you might find laughable, but nevertheless comes up constantly, and that's this idea of substitution. Maybe help put in perspective for us in the investment community just how non-substitutable is tungsten. The question we get a lot, by the way, is tungsten's used in, like, drilling applications as a cutting tool, so why can't you use diamonds?
You can. Diamond drilling, I think, I'm not a, you know, I'm not a drilling expert, but they're used for different types of drilling, you know.
They still have to be encased in an alloy, which often has to be covered in tungsten for the durability.
Yeah. I don't think there are any major applications for tungsten that you would see, you know, a lot of substitution.
Well, well actually, I remember when they did it last time. Back in the 1950s, tungsten was more valuable than gold. US Steel came up with this great idea, because they were blending it in their steel. They said, "You know what? It's too expensive. We're gonna be the smart ones. We're gonna use moly, molybdenum," which they did. The Japanese in Asia and Europe, they carried on using the tungsten. Now if we fast-forward to today and we look at the state of the steel industries, we can see that probably it wasn't the greatest idea because the performance of that steel was significantly degraded from the one that was using tungsten. The good news is why would you want to substitute something you use so little of in the first place? There's not really a driver. It's the price isn't your problem.
Availability is your problem. Don't need much of it. The entire, what is it, 125,000, 130,000 including scrap a year that we consume and, you know.
Give or take, yeah.
over the entire planet. That's it. There's not really that demand to substitute it, 'cause you don't use enough of it, and the price is not impacting its use.
If you look at things like cutting tools, you know, you started out with solid inserts, now they're coated inserts. They've already done the sort of thrifting. Unit consumption is.
you know, at its sort of lowest that it can be.
Still charge the same money.
Well.
You know. I mean.
Also, if you look at the cost of the inserts or the machining tools in the overall product, again, you know, a rise in price of tung- even if it's seven times higher, the impact on the final product is smaller. You know, it's like, you know, alloys in a jet engine, you know, rhenium can go up 12 times, but it makes a sort of, you know, 0.5% difference to the cost of the turbine blade or something like that. The actual, you know, multiplication factor.
Even more stratospheric really to have a major impact on the substitution side.
We'd definitely like to take any questions from the audience. If there are any, just put up your hand and we'll get a microphone to you. You know, maybe while you're thinking about whether you have a question, there was something I really wanted to touch on, which is the idea of minimum pricing in contracts. We're hearing about this more and more. You know, very recently we've been hearing discussion about $2,000 minimum contracts in defense contracts, or minimum pricing in defense contracts. Where do you see that today? Where do you see it going? Is it gonna become a permanent feature of the industry?
Well, we've been getting them for years at Almonty. Hard floors, no cap on the upside. It was never about subsidy, it was about essentially a safety net. Firstly, it deters China from collapsing the price if everyone has these minimum floor pricing. Secondly, it means that these mines can at least cover their obligations, make a small profit, and survive in the lean times. I think the way we've seen it used, you know, more recently has been more of a subsidy one, which I think even the USG is shying away from because subsidies don't work. Floor price is essentially a fantastic tool. The question is who pays it? Is it reimbursable? Is it borne by the seller? Is it borne by the government?
Is it borne, you know, the mine has to, you know, get a guarantee for a bank. There are many questions, but floor pricing itself is a very effective tool. You use someone else's balance sheet to fund the project.
Where are you seeing levels today? Are you hearing and seeing about levels as high as.
Not in tungsten.
No.
Not in tungsten. We're not seeing it in tungsten because ultimately, who are they given to? You know, no one's near production. It's, you know, we're not seeing anybody getting them in, you know, outside of us in tungsten. The only one that I know of is for Allied Critical, and it's for pilot plant production. It's like, you know, 50 tons.
Yeah, I mean it's for one year only.
Oh, yeah.
It's for one year only.
It's, I mean, it's not a, it's not like a commercial contract.
No, it's.
I mean, it's a floor price.
For 12 months, what, for a pilot plant.
Yeah.
I mean, a floor price actually for production.
No, it's not gonna move the needle.
The question is why would you want a floor price with a pilot plant?
No idea.
That's a different conversation.
Yeah. I didn't put it in place.
I wanted to turn the subject a bit to some of the other potential bottlenecks that could face this industry that's also facing other extractive and critical material industries, so transportation and logistics. Are those impacting the availability of supply and pricing today in any way?
No. Tungsten's dense. You can pack an awful lot of it into a small space. In a 20-foot container you can put 24 tons, as long as you have three axles on the truck that picks it up. I've learned over the years exactly how to do it. No, it's, it's a very dense metal. You use very little of it. Shipping is not a problem. You can go in 20-foot containers, and there's 15 different ways to get it there. That's You're not impact. You don't need huge, you know, vast. You know, it's simple. It is a simple, dense metal that compacts very small, into a very small area.
Big theme of this conference has been cost. Cost and inflation across the metals and mining sector is putting some 2026 guidances at risk. There's a lot of discussion on what that means for 2027. What does that mean for tungsten? What are the key inputs? Is diesel a threat to the cost curve? Could it be rising materially as a result?
I mean, we've had a spike in diesel prices, but how long does that continue for it impacts margin? I think ultimately the biggest problem all mines face in a high price environment is remaining fiscally disciplined. You know, you have to remember, a mine is made up of some of the biggest pirates you can imagine, engineers, metallurgists, geologists, all itching to spend money. If they think for a minute there's more money in the company, they suddenly find reasons to buy 3 pumps instead of 2. The management's job is to keep that fiscal discipline of lower the expectation, plan for the past and not the future in terms of pricing. I think a lot of the issues is as the margins increase, miraculously so somehow does OPEX.
Diesel is if it continues at this price for six, eight months, yes, it will impact, but it's been, what, one month. It shouldn't have a, you know, an enormous impact. To be honest, if you operate in a democracy, you should already be geared for higher energy costs. You should already have programs in place to be efficient.
What is the rough % of diesel in terms of OPEX?
It depends. If you're open pit, you're hard rock, I mean, you're using, you know, energy from a grid for, I mean, we're all connected to the grid in all our sites so we don't have generator exposure. I mean, you're looking, your biggest cost is labor. Energy cost is second. Energy is probably around about 14% all in of your costs. That's for us. Every mine is different. If you're in the middle of nowhere, obviously much higher.
While we're on the topic of Almonty Industries, what's the latest on the ramp up of Sangdong in Korea? In that same thought, perhaps, update us on the expansion at Panasqueira and the timing for that?
Thanks, Lawson Winder. Well, Lawson Winder, what I would like to say is that I wouldn't build another mine in a democracy in a hurry. It's not for the faint-hearted. I think it's a long and laborious journey. I'm now having the tingles of excitement as it comes to a conclusion finally. We hope now to generate data, bookable data next month. We are over 50% through sign off from Metso Outotec. We're almost there. We've run pilot plants for 5 years. We've, you know, we've put the hard yards in. We've had the luxury of walking to the finish line, which is very important. We haven't been the junior miner that's pressured to make crazy decisions to get a headline.
As for Portugal, drilling continues. Once that's concluded, we can then plan the mine plan to open up that level 4. It's in hand. Again, it's something where we don't need any permits in Portugal, we don't need any additional infrastructure. It's a question of just opening up a, you know, a new adit into a lower level. The drilling continues, as it does also with our moly and it's mining. We would love everything to be finished by this time next week. I've always said, walk to the finish line. No greater way to lose money than a mine that's rushed into a headline.
With Panasqueira, the original idea was sometime in 2027 for first L3 ore through the mill. Is that still the idea?
L4? Yep.
L4.
Yep. It's still the plan. As I said, let's get through the drilling. We like to take one hurdle at a time in the mining company, and then we go to the next hurdle. Let me finish the drilling, finish the mine plan, and then we'll look at the best way, most efficient way to get in there. We would start to see that 2027 is the year that we'll see it.
Is that the same idea for phase two of Sangdong?
Phase two, we'll already start the planning now to start building it out. It'll take a 12-month period to go fully ramped up, but every four months we should start seeing an increase in output as each gallery comes online. I have to get a new ball mill and rod mill to sit alongside my existing ones, but they're not a long lead time item, bizarrely. I mean, it's six months, but other things, more innocuous things seem to be much longer lead time. Metso are on site, so we're taking advantage of their planning ability while they're there. Yeah, we'll move straight to phase two.
Okay, fantastic. There's a lot of other options in the portfolio as well. What is the thinking between the U.S. mine, you have the Spanish mines, of course there's a permitting question with those, and then you have moly?
The moly we'll do. We have the second-largest consumer of moly in the world sitting domestically in country, so it would make complete sense, and they want us to very much build it, as does the government. We will look to downstream our tungsten to tungsten oxide, because that's a backbone product of the tungsten hexafluoride for the semiconductor industry, and 97.4% of all oxide in Korea has come from China. You can see there's a huge push for diversity there. Montana, slow and steady, discreet, under the radar. The NGOs let them focus on those poor guys next door in Barrick Gold who made too much noise when they arrived. We're staying quiet. It'll be a very slow, gradual, organic growth there. I think we are looking at a number of other things.
None of these things that you see being passed around, but we have a good Rolodex of assets, and we may even start making investments into projects we think are viable. We can use our technical knowledge and join the board and really drive them to a successful conclusion and help with funding, because with our basically involvement, funding should become, you know. They have a great pool of capital to call from. That's also something we're gonna start looking at very seriously in the later part of this year.
That's fascinating, 'cause that helps to solve the skill availability issue.
That's one of our thoughts. Quite frankly, it's important my sector does well, because I don't have enough material to provide all my customers, and my customers, quite frankly, struggle with this idea of supply chain. Me getting involved with other sites that we think are viable makes a lot of sense. We spread the knowledge, our shareholders benefit from that, you know, exposure, and the other projects obviously benefit from our access to capital.
Okay. To finish things off, question for both of you, what is the factor that you think the market is just totally missing, under-appreciating today that is most going to surprise on tungsten fundamentals in the next year?
Go on, you go.
Yeah.
No, no, you're gonna have one much better than me.
Well, I mean, part of the problem is tungsten's very under-appreciated in general.
Not by my ex-wife.
Well, I mean, it's not a sexy, you know, energy, what do you call it? Energy transition metal. You know, it's not used in, you know, batteries and wind turbines and all this, you know, like rare earths. Rare earths have been front and center. It's been in all of the papers, in all of the news. Tungsten, you know, historically a very sort of industrial metal. You know, steady growth, no, nothing to frighten the horses, and it's only really this current, you know, price spike that's really generated the kind of the news. I think it shows that, you know, it has been under-appreciated in terms of a market because it is a critical and, you know, it's at top of the list.
You look at the USGS list, you look at the European criticality list, tungsten is actually near the top. It hasn't had that kind of exposure. I think this is what's really generated, and that's what's gonna keep it front and center in the next year.
I would add to that, you know, rare earths aren't rare. Tungsten is actually really rare. I think one of the problems that the West has faced is that how do you acknowledge you have a problem with a metal that's so vital without telling your adversaries you have a problem with something that's so vital? In many ways, there's always been a sort of tungsten diplomacy about it that it was the secret that everyone knew about, but really didn't want to make too much noise about.
What China did by taking their hands off the wheel and the price going up, people say, "Well, wait a minute, we need this in everything." Government is trying to find a solution, but even acknowledging they have a problem is in itself an admission that the adversaries would be very aware that there is a supply issue. I think, you know, that there are now, we're seeing now task force being created in DOD around tungsten, showing that first step of acknowledging you have a problem is you acknowledge you have a problem. I think it's gonna get more and more traction, this space, over the next 12-24 months.
That's very exciting. I look forward to that. I think everybody in this room and listening in on the line certainly look forward to that too. Mark, Lewis, thank you very much for being.
Thanks very much, Lawson. Thank you