Report on the Development of China's Tungsten Industry 2021 (II)China Tungsten Industry Association News Center

PART II DEVELOPMENT STATUS OF CHINA TUNGSTEN INDUSTRY IN 2021

Horizontal multi tube reduction furnace for tungsten powder production

2.1 Overview of Economic of China

2.1.1 Tungsten Production Capacity Increased Steadily

The production capacity of main tungsten products increased steadily. According to the statistics of CTIA, the production capacity of China of tungsten concentrate, ammonium paratungstate (hereinafter referred to as APT), ferrotungsten, tungsten carbide powder and tungsten cemented carbide is 177,000 tons, 196,000 tons, 30,000 tons, 90,000 tons and 70,000 tons respectively.

Due to the implementation of resource replacement projects and technical transformation and capacity expansion in some mines, the production capacity of tungsten concentrate increased slightly; Part of apt capacity gradually withdrew, while some capacity was added by technological transformation and capacity expansion, which decreased slightly overall; The technological transformation and capacity expansion of some powder and alloy enterprises have led to an increase in the production capacity of tungsten carbide powder, a strong demand for tungsten cemented carbide and a rapid growth in production capacity; Tungsten iron production capacity was flat. The production capacity of major tungsten products in China in recent five years is shown in Figure 1.

Figure 1 Production capacity of major tungsten products in China from 2017 to 2021 (CTIA)

2.1.2 The Output of Main Tungsten Products Increased Significantly

According to the statistical analysis of CTIA, in 2021, the output of tungsten concentrate of China was 135,500 tons (converted into WO3, 65% tons, hereinafter referred to as standard tons), a year-on-year decrease of 2.25%. The national output of APT, tungsten carbide powder, tungsten cemented carbide and ferrotungsten increased by 9.52%, 29.04%, 24.39% and 20.00% respectively year-on-year: the economic situation at home and abroad improved and the recovery of demand driven the restorative growth of production and operation of tungsten industry. The output of tungsten products in recent 5 years is shown in Figure 2.

Figure 2 Output of main tungsten products in China from 2017 to 2021 (CTIA)

The Sandgong Tungsten, also known as the Almonty Korea Tungsten is a historical mining site in South Korea that is currently being developed by Canada-based Almonty Industries through its wholly-owned subsidiary, Woulfe Mining Corp.

2.1.3 Tungsten Industry has Improved Better as Income has Reached a Record High

In 2021, the epidemic prevention and control achieved phased results, the global economy recovered well, the production of all walks of life resumed, driven the restorative growth of the tungsten industry, and the operating efficiency improved significantly. According to the statistical analysis of CTIA, the main business of the national tungsten industry received 106 billion RMB Yuan/ton, a year-on-year increase of 42.28%; The total profits and taxes reached 9.5 billion RMB Yuan/ton, a year-on-year increase of 29.25%; The profit was 5.9 billion RMB Yuan/ton, a year-on-year increase of 68.57%. The main business income and profit of tungsten industry in recent 5 years are shown in Figure 3.

Figure 3 Ain business income and profit of tungsten industry from 2017 to 2021 (unit: 100 million RMB RMB Yuan/ton, CTIA)

2.2 Tungsten Products Structure

2.2.1 The Tungsten Product Structure Extends to Deep-processing

The adjustment of Tungsten product structure and industrial transformation and upgrading continued, and the output of high-end products increased. The production capacity of tungsten cemented carbidekeeps growing, especially the investment in bars and high-end tungsten cemented carbideNC blades continues to grow. In 2021, the conversion rate of APT to tungsten cemented carbidewas 53%, an increase of 6 % over the previous year, breaking the 50% mark for the first time, and showing an upward trend year by year.

2.2.2 The Overall Industrial Pattern Remained Stable

China's tungsten concentrate is mainly produced in Jiangxi, Hunan and Henan provinces, accounting for 85.47% of the total output, an increase of 0.53 % year-on-year. Apt producing areas are mainly distributed in Jiangxi, Hunan and Fujian. In 2021, the output of the three provinces totaled 89,200 tons, accounting for 77.64% of the country, an increase of 1.24 % over the previous, of which the output of Jiangxi accounted for 48.40% of the country, an increase of 5.06 % over the previous year.

Figure 3 Proportion of tungsten concentrate output in Jiangxi, Hunan and Henan provinces in 2021 (CTIA)

Tungsten Cemented carbide NC cutting tips

Figure 4 Proportion of APT output in Jiangxi, Hunan and Fujian in 2021 (CTIA)

The producing areas of tungsten cemented carbide are mainly distributed in Hunan, Fujian, Jiangxi and Sichuan. In 2021, the total output of the four provinces was 35,600 tons, accounting for 70% of the national output, which was basically the same as that of the previous year. Among them, the output of Hunan accounted for 34% of the national output, ranking first. Among the four provinces, the output of Fujian increased by 33.50% year-on-year, with the fastest growth. See Fig. 3, 4 and 5 for the output proportion of main production areas of tungsten concentrate, apt and tungsten cemented carbidein 2021.

Ammonium paratungstate(APT) is one of the tungstate salts. Its appearance is white powder crystal, and its molecular formula is (NH4) 10w12h2o42 • 4H2O. It is slightly soluble in water and stable in air at room temperature. It begins to decompose into WO3 at 25 ℃. It is an intermediate product of tungsten industry and the main raw material for the production of tungsten oxide. Tungsten oxide is obtained by calcining at 700-800 ℃. APT can be purified by evaporation crystallization. The pH value largely determines and affects the physical and chemical properties of APT.

Figure 5 Proportion of tungsten cemented carbideoutput in Hunan, Fujian, Jiangxi and Sichuan in 2021 (CTIA)

2.3 Tungsten’s Market Price

Tungstens’ market prices rose moderately and new_ed reasonably. In 2021, major economies implemented loose monetary and fiscal policies and actively responded to the impact of the epidemic. The recovery momentum was obvious, which led to the recovery and stable operation of the tungsten market. Compared with other metals, the market price of tungsten has increased moderately and gradually upward, which is generally in the market equilibrium range in recent years.

Monthly average price curve of tungsten concentrate & ammonium paratungstate (APT) from Dec. 2019 to Dec. 2021

The price of tungsten concentrate in Chian was in the range of 86,000 ~ 112,000 RMB RMB Yuan/ton. The price of tungsten concentrate was below 100,000 RMB Yuan/ton by the end of May, and rised rapidly in July, it fluctuated around 110,000 RMB Yuan/ton in the second half of the year. In 2021, the average annual price of tungsten concentrate was 100,500 RMB Yuan/ton, a year-on-year increase of 21.21%, the average annual price of apt was 153,800 RMB Yuan/ton, a year-on-year increase of 20.31%, the average annual price of APT in Europe was 289.30 USD/ton, a year-on-year increase of 35.86%, and the average annual price of ferrotungsten in Rotterdam was 28.39 USD / kg of tungsten, a year-on-year increase of 23.79%. See Figure 6, 7, 8, 9 and table 3

Tungsten mines in open pit mining, Jiangxi, China. The content of tungsten in the earth's crust is only 0.007%, of which more than 50% is in China. China's tungsten reserves are mainly distributed in Hunan, Guangdong, Jiangxi, Fujian, Henan and other provinces; Jiangxi is the most concentrated in the south, Daji mountain, Xihuashan, Kuimeishan and Pangushan are all world-famous tungsten mines located in Jiangxi. After tungsten ore is mined from tungsten mine, tungsten concentrate is produced through technological processes such as crushing, ball milling, gravity separation (mainly shaking table and jigging), flotation, electric separation and magnetic separation. The content of tungsten trioxide, the main component, can reach more than 65%. Tungsten concentrate is raw material for the production of tungsten compounds such as ferrotungsten, sodium tungstate, ammonium paratungstate (APT) and ammonium metatungstate (AMT) and then processing tungsten trioxide (YTO), blue tungsten oxide (BTO), violet tungsten oxide (VTO, Purple Tungsten), cesium tungsten, nano tungsten oxide, tungsten powder, tungsten carbide, cemented carbide, tungsten steel and tungsten bar. All news and prices of China Tungsten products, please visit news.chinatungsten.com.

Figure 7 Variation curve of average monthly price of tungsten concentrate in Chinese market from January 2019 to December 2021 (CTIA)

In December 2007, Wolf Minerals, a special metals exploration and development company, acquired Hemerdon Tungsten Mine and renamed it Drakelands Tungsten Mine (DTM). In May 2011, wolf minerals completed the feasibility study of the DTM project and officially put into operation in 2015. However, the mine has never achieved its mining or financial objectives. In October 2018, Wolf Minerals was overwhelmed and went bankrupt after losing £ 100 million. The DTM was announced to be closed again. In November 2019, Tungsten West acquired the DTM with £ 2.8 million in cash. At present, feasibility study and further financing plan are under way to restore the production activities of the mine in 2021. The restart cost is expected to be £ 30-40 million. Tungsten West hopes to fill the gap in the tungsten concentrate market outside China through the DTM.

Figure 8 Annual average price change curve of tungsten concentrate in China market from 2011 to 2021 (CTIA)

Figure 9 European APT price of Metal Guide from January 2019 to December 2020 (CTIA)

Table 3 Annual Average Price of Tungsten Products Worldwide

Annual average price of tungsten products worldwide (CTIA)

According to customs statistics, in 2021, the average price of China's exported tungsten products was US $39,607.91/ton of tungsten metal, with a year-on-year increase of 16.21%. The export prices of apt, tungsten trioxide, tungsten powder and tungsten carbide powder increased by 23.65%, 24.57%, 16.44% and 18.79% respectively.

Application of ammonium paratungstate(APT): as an important intermediate in tungsten metallurgical industry, apt can not only be used to produce tungsten oxide(trioxide, WO3), ammonium metatungstate(AMT), metal tungsten powder, tungsten bar, tungsten wire and cemented carbide, but also be used as a colorant in ceramic industry, a catalyst in petrochemical industry and a water absorbing gel in chemical industry.

2.4 Import and Export of Tungsten

2.4.1. Import and Export Recovered Growth

In 2021, China exported 32,962.24 tons of tungsten products (metal volume, the same below), a year-on-year increase of 45.62%. After two years of continuous decline, it showed a restorative growth, and the export volume new_ed to the average level of nearly five years, which was still lower than the historical high of 15.85% in 2018. In 2021, the export volume of tungsten products was US $1,547 million, with a year-on-year increase of 59.35%. After two years of continuous decline, it turned to positive growth. The export of raw material grade tungsten products was 21,634.71 tons, with a year-on-year increase of 60.22%, turning from decline to positive growth; The export of tungsten cemented carbide is about 8,300 tons (converted into metal), with a year-on-year increase of 22.06%. The competitiveness of China's tungsten cemented carbide products in the international market is gradually improved. See Table 4 for the export of tungsten products in recent 5 years.

Table 4 Export of Tungsten Products from 2017 to 2021 (tons of tungsten, US $100 million)

Export of Tungsten Products from 2017 to 2021 (CTIA)

The formula of violet tungsten (VTO) is WO2 72 (or W18O49). Compared with nano blue tungsten, nano violet tungsten is more suitable for the preparation of nano tungsten powder and nano tungsten carbide powder. High purity nano violet tungsten is not only a very important n-type semiconductor material, but also a very excellent photothermal conversion material. It has a strong absorption of electromagnetic waves, especially short wavelength ultraviolet and near-infrared. More details about VTO, please visit the web of CTIA.

In 2021, the import of tungsten products was 5,986 tons (converted into metal volume, the same below), with a year-on-year increase of 13.07%, with positive growth for two consecutive years, slightly higher than the average level in recent five years. Tungsten concentrate and tungsten cemented carbideare the main imported products. In 2021, 2,656 tons of tungsten concentrate were imported, with a year-on-year increase of 62.60%, accounting for 44.37% of the total import, an increase of 13.52 percentage points over the previous year; 1400 tons of tungsten cemented carbidewere imported, down 6.67% from the previous year. See Figure 10.

Figure 10 Tungsten import volume from 2017 to 2021 (China Customs)

In 2021, China's net export of tungsten products was 27000 tons, with a year-on-year increase of 55.55%; the net export volume was 768 million US dollars, with a year-on-year increase of 225.45%; In 2021, the total export volume of tungsten products was 5.5 times of the total import volume, while the total export volume was only 2.0 times of the total import volume, mainly due to the high price of imported high-end cemented carbide cutting tools.

2.4.2 The Four Major Export Destinations Increased Significantly Except the US

Japan, South Korea, Europe and the United States are the four major destinations for China's Tungsten exports. In 2021, tungsten products exported to Japan, South Korea, Europe and the United States were 6408.55 tons, 5856.12 tons, 7356.43 tons and 1940.9 tons respectively. Japan, South Korea and Europe increased by 73.19%, 62.11% and 75.64% respectively year-on-year, and the United States decreased by 17.58%. The tungsten products exported to the above four countries and regions accounted for 87.43% of the total tungsten products exported, a decrease of 0.07 percentage points over the previous year. Among them, the tungsten products exported to Japan, South Korea, Europe and the United States accounted for 25.99%, 23.75%, 29.83% and 7.87% of the total tungsten products exported respectively. Compared with the same period, the proportion of Japan, South Korea and Europe increased by 2.62%, 0.93 and 3.38 percentage points respectively, as shown in Figure 11 and 12.

Figure 11 Change trend of export volume of tungsten export destinations from 2017 to 2021 (China Customs)

Ammonium metatungstate (AMT) ((NH4) 6h2w12o40 • xH2O) is a water-soluble compound of tungsten, which is white crystalline powder or yellowish, harmless and weakly acidic. It can be used to produce raw materials for catalysts, capacitors, nuclear shielding, flame retardants and corrosion inhibitors. It is also an excellent raw material for preparing ultra-fine tungsten powder, high specific gravity alloy tungsten powder, phosphotungstic acid, arsenic tungstic acid and silicon tungstic acid; AMT can be used in catalytic chemical industry, medical industry, semiconductor and other scientific and chemical disciplines. (www.chinatungsten.com)

2.5 Investment, Financing & Promotion of New Tungsten Projects

In 2021, the tungsten producers of China carefully planned a number of key projects around industrial transformation and upgrading, process and technology innovation, product optimization and quality improvement, which promoted the green and intelligent development of the industry and provided strong support for the high-quality development of the industry. The technological transformation of tungsten carbide powder intelligent production line of Zhuzhou Cemented Carbide Group, a branch of China Tungsten High Tech Co., Ltd, the CNC blade production line of Zigong Cemented Carbide, another branch of China Tungsten High Tech, the underground 5g network construction for mining of tungsten ore in Shizhuyuan Nonferrous Metals Co., Ltd. have been completed. Meanwhile, Ganzhou Industrial Park project with a total investment of 10.2 billion RMB Yuan by Jiangxi Tungsten Holding Group has been started, and the phase I construction of an annual output of 10,000 tons of tungsten powder and 8000 tons of tungsten carbide powder line，tungsten powder and tungsten cemented carbide mining production line of Xiamen Jinlu Haicang Tungsten Cemented Carbide Industrial Park (phase II) with a total investment of 2 billion yuan by Xiamen Tungsten are also have been started, and the annual output of construction has been increased 12000 tons of tungsten powder, 11,200 tons of mixture tungsten carbide powder (tungsten ready to press powder), 2000 tons of tungsten carbide mining tips production line and supporting facilities; With a total investment of 560 million RMB Yuan, the main infrastructure of the industrialization project of Lugu Base of Boyun Dongfang with an annual output of 2000 tons of high-efficiency and precision cemented carbide tools and high-strength and toughness extra coarse-grained tungsten cemented carbide tunneling tools has been completed.