Closing the tungsten loophole

Welcome back to Hard Work. I wasn’t sure what to expect when the first edition went out. What I got was a full inbox – some of it kind, some of it opinionated and a fair bit of it forwarded on to people I’d never have reached myself. Thank you for that. I said last time that sensible feedback was welcome and mild abuse would be entertained depending on my mood, and you took me at my word on both counts. I’m still working through the replies and I intend to answer every one, so if you haven’t heard back yet, you will.

The short version of your response was: keep going. So let’s get into it.

The loophole was always the story

Since the last newsletter, the White House signed an executive order tightening the rules on where America’s defense supply chain gets its critical materials. Plenty of people read the headline as “the US bans Chinese tungsten.” That’s not the news. The ban already existed – it’s been on the books for a while. The news is the waiver.

Because there’s always been a side door marked “exceptional circumstances.” Can’t find compliant material? Apply for a waiver, buy the Chinese material anyway, carry on. And the push for those waivers wasn’t really coming from the industrial base. It was coming from traders.

Think about the incentive. A trader needs margin, and there’s precious little tungsten available anywhere outside China. So step one, get a waiver; step two, find the cheap material; step three, make your money. For a good number of people, that was the whole business model.

The executive order takes the side door off its hinges. From the start of 2027, the waivers stop. Want one before then? You file a formal plan proving you hunted for alternatives and showing how you’ll get the non-compliant material out of your chain, with a timeline attached. Traders lobbied for a five-year transition, but they didn’t get it.

I’m not a political man, but this is the right thing to do, and I like the aggression of it. Every serious nation needs more than one place to go shopping. Like or dislike China, that’s just the most basic rule of not being at someone else’s mercy. The administration flagged this years ago. Everyone said “we’re on it,” and then did nothing. So now it’s a rule, not a suggestion. The companies that took the warning seriously are about to take a great deal of market share from the ones that didn’t. That’s the game, and it’s finally being played on the level.

Tungsten markets

Michael Dornhofer, ISBP – assessment as of 31 July, 2026

It is no surprise that during vacation time, there is little movement in the tungsten world. The prices for tungsten raw material and tungsten downstream products did not change in recent weeks, neither in the west, nor on the Chinese domestic market. I assess APT at around US$3,000 to 3,200/mtu WO₃, CIF Rotterdam and Baltimore.

As it is not expected that China will change its dual-use policy, the shortage of raw material in the west will persist, which supports tungsten prices in the mid- and long-term.

Chinese sources report that new and extended safety and environmental inspections have started in several mining provinces. In the past, such inspections always led to reduced mining output. Prices in the Chinese domestic market are therefore expected to rise again soon.

Higher raw material prices have prompted greater efforts to raise recycling volumes. But it must be said that significant recycling rates are achievable only in the hardmetal and tooling sector. Tools are certainly an important part of the tungsten downstream market. But the growing applications for tungsten are in military, electronics (including WF₆ for semiconductors and memory chips), batteries and similar fields.

In all of these sectors, (nearly) no recycling is possible. The demand from these industries must be covered by fresh tungsten. The worldwide mining output must therefore grow notably faster than overall tungsten consumption.

Michael Dornhofer is founder of ISBP (Independent Supply Business Partner) in Graz, Austria. He has spent more than 20 years in tungsten, including 13 years at Wolfram Bergbau und Hütten, Sandvik’s tungsten business, and has worked as an independent agent and consultant to the tungsten and hard metal industry since 2019.

Show me the metal

The executive order mentioned in my opener also pushes the responsibility down onto the defense primes. It’s on them now to make sure the components they buy were made with tungsten that didn’t come from China, Russia, North Korea or Iran. Which sounds simple, until you ask: how hard have they looked at their own supply chains? How much of the compliant material their suppliers promised is real and sitting in a yard – and how much is a story?

The supplier’s whole incentive is to be the reliable one. Nobody wins a contract with a prime by saying “this will be difficult.” They say “don’t worry, we’ve got this,” turn up in a good suit with a healthy balance sheet, and everyone finds it easier to take the reassuring answer than to check it. The primes aren’t villains. They’ve simply never had to think about this, because for thirty years the supplier always said it was handled.

Think of how a developer runs a build. He hands out the contract for the steel and he doesn’t accept “it’s coming.” He says: show me the steel. I want to see it in the yard, and I want to count it. That’s the posture defense procurement is being dragged toward, and not before time – the free market is full of people who’ll tell you exactly what you want to hear.

And now when “prove it’s not Chinese” becomes the rule, a lot of energy will go into making material look not-Chinese. Conflict material, allegedly, can come out of Myanmar, find its way into China, get reprocessed somewhere like Vietnam, and emerge with a clean passport. Is it Chinese now? Not on paper. The harder you police origin, the more creative the laundering gets. And everyone will have their excuse ready – Trump told them no Chinese material, nobody gave them a waiver, so what were they supposed to do?

What I’m hearing

​China’s just launched one of the biggest amphibious assault ships anyone’s ever built. One ship isn’t a tungsten story – but it tells you defense is front and center for everyone now, not just us. China won’t tell you how much tungsten it’s using on its own programs, but map their build-out against ours and it’s more than they can supply themselves. They’re a net importer of concentrate and scrap now. So they’re chasing the exact same material we are – except they can shop in our market, and we can’t shop in theirs.

What I’m reading

Everyone in AI suddenly loves “open”​
Twenty-five of the biggest names in technology – Meta, Nvidia and Y Combinator among them – have signed an open letter begging Washington not to restrict “open-weight” AI models, the kind you can download and run yourself. The arguments are high-minded: open access drives innovation, helps security researchers, keeps America ahead. Probably all true. But look at who’s signing. The labs want to stay in the race, the investors want startups that are cheaper to fund, the hardware crowd wants everyone buying more chips. Every one of them has a commercial reason to want “open” to win, and every one has dressed it up as a principle. 
Read more​

Zuckerberg discovers the little guy​
Mark Zuckerberg used the pages of the Wall Street Journal last week – behind its paywall, unfortunately – to explain that the future of artificial intelligence belongs to everyone, that power should sit with individuals rather than a handful of institutions, and that history punishes the centralizers. It ran the same week Meta reported its free cash flow had fallen ninety-one percent, from $8.5bn to under $800m, as it threw better than $30bn in a single quarter at AI, with the tab for the year now past $130bn. The shares dropped about ten percent. And there’s the small matter that the champion of decentralized power has arranged Meta’s shares so that he, personally, cannot be outvoted or removed by anyone. I’ve read plenty of manifestos about handing power to the people. They’re usually written by the man holding onto it.

NASCAR remembers what it is​
I am, unashamedly, a ‘car guy’. So I enjoyed this read on NASCAR trying to win back an audience that’s wandered off to Formula 1 – with half the TV numbers it had a decade ago and a slicker European rival claiming the younger crowd. Its answer isn’t to imitate F1. The new marketing campaign all but sneers at it: “if you want perfect turns and polite applause, you know where to find it.” Fighter jets, muscle cars, Lynyrd Skynyrd, fans camped trackside with nobody behind a velvet rope. Whether it works or not, I admire the clarity. Too many businesses lose themselves trying to be a classier version of a rival. NASCAR looked hard at what it is – loud, unpolished, unmistakably American – and decided to lean in.

Opinion

Let me pick a fight with a word: “rare.”

We put rare earths, lithium, graphite and tungsten on the same lists and treat them as one problem. They’re not. Rare earths, lithium, graphite – none of it is actually rare. There’s plenty in the ground; it just hasn’t been dug up yet. So if you’re a government or an investor, you can find a deposit, back a project, and reasonably expect something at the end of it. Hard, but doable.

Tungsten is more tricky. It genuinely is rare, it comes in stubbornly low grades, and it’s a brute to process – hard, heavy, unforgiving. Worse, when cheap Chinese material shut nearly every Western mine in the 1990s, the know-how went with them – and no one trained the next generation.

The hard problem always loses to the easy one. You can announce a lithium project and look busy tomorrow; tungsten won’t let you fake it. Which is why there are a hundred tungsten juniors and barely a tungsten mine. The one metal that’s genuinely hard to replace is the one almost no one is seriously trying to.

In the media

The New York Times went underground at Sangdong. The paper sent a reporter and photographer into the tunnels of our Korean mine for a long read on America’s scramble for tungsten. There’s a good historical detail in it I didn’t know myself. This isn’t the first time America has turned to this mountain. When the Korean War broke out and Chinese tungsten was cut off, Washington sent a geologist to Sangdong to see if it could fill the gap, with orders to report straight back to the Secretary of State and General MacArthur. The US ran the mine and bought its output until 1954. Three-quarters of a century on, here we are again – same mountain, same reason.

We also took two of our longest-standing shareholders down into Sangdong – through the mine, the processing plant and past the growing ore stockpile. These are people who backed us years ago, when leaning on China still looked to most of the world like the sensible thing to do. Showing them what that faith built, now it finally starts to matter, was a real pleasure. We’re not a development story any more, and they saw it for themselves.
See our LinkedIn post about the trip here.

Drop me a line

That’s Edition 2 wrapped. You wrote back in numbers last time, and a fair amount of it changed how I think about what goes in here – so keep it coming, agreements and arguments both. And if there’s someone who ought to be on this list, please send them my way.

I’ll be back in your inbox in a fortnight.