The Korea Times has interviewed Lewis Black, CEO of global mining company Almonty Industries Inc. that owns the Sangdong Mine in Gangwon Province, Korea, which was historically one of the largest tungsten mines in the world.
Alfonse D’Amato who is a former U.S. senator from New York, and the founder of Park Strategies LLC, a public policy and business development firm also joined the interview. His son Daniel D’Amato is the co-founder of Almonty Industries Inc.
Below is the full transcript of the interview with Lewis Black and senator Al D’Amato.
Q. Lewis can you give us an overview of what Almonty Industries does?
LEWIS. Almonty Industries specializes specifically on the strategic metal tungsten. We have five generations of expertise in its extraction and we own the longest running mine in the world in Portugal which has been running for 126 years. We account for roughly seven percent currently of outputs outside of China. This will increase to closer to 30 percent when South Korea opens but the most important thing is tungsten’s a very difficult metal to produce and we have a depth of knowledge that is unmatched and the industry accepts we are considered to be the best operators outside of China and one of the best operators in the world.
Q. We all know that tungsten is a strategic medal but could you tell us how this resource is exactly being used and explain to us its importance in production and manufacturing?
LEWIS. Well, I mean for instance in South Korea, it’s the largest consumer of tungsten per capita in the world because it’s extensively used in the semiconductor business but it also is included in aerospace, in the car manufacturing, in medical and in defense and there’s a little bit of it in just about everything that’s in your life, from the vibrator in your telephone to a guidance system on a satellite. You need very small amounts of it but without that little piece of tungsten the product is completely useless.
SENATOR: It is the strongest metal in the world. It’s an alloy which is absolutely essential particularly in drilling for example. Drilling equipment you’ve got to have tungsten. In the defense of your nation, in the manufacturing of equipment where a high intensity heat is there. It is an alloy which is essential and unfortunately over the years, China has come to, in some cases, represent well over 80 percent of the world’s production of of tungsten and it used this to its advantage in driving out competition so that if there was a tungsten mine in the Western Hemisphere, the Chinese would dump their product, lower the price and drive the mines out of business so there’s never been any real competition. Lewis and my son have worked together over 10 years to bring Almonty to this position. Many people scoffed at it and now many people are looking and saying ‘my gosh’ because Almonty is on the verge of starting the reopening of this critical asset, critical to the world.
Q. How big of an impact will this mine have on the global opportunity?
LEWIS: This mine is very well respected through the entire industry because it is seen as the greatest. I think it’s the best way to put it. It is seen as the ultimate mine in tungsten. It has the highest grade, it has 70 plus years of reserves. The Chinese are in many ways not terribly comfortable that this mine is going to reopen because it does have the ability to really take some of the strength of the Chinese dominance of this market away.
SENATOR: There is a very wonderful opportunity to turn to this mine which strategically is so important for South Korea because it can give it all of the tungsten that South Korea needs and it can supply the Western Hemisphere and indeed the mine is so rich. We have contracts ready with some of the largest companies in the world which will guarantee that they’re not going to be shut down with the Chinese dumping and lowering the price because they’ve entered into agreements that go into the future over the next 15 years and so what we can do is break that stranglehold that China has over the rest of the world.
Q. Summarize for us what you see are the real benefits for the Korean economy, the Korean citizens and most importantly that region which is not that close to the metropolitan Seoul area.
SENATOR: The reopening of the Almonty Korea tungsten mine and Sangdong is a major infrastructure project for the community. We’re going to be investing well over a hundred million dollars in this project, 80 million comprising direct capital expenditures related to the reopening.
LEWIS: And initially there will be more than 200 people working for the sites as the mine expands and we also developed the molybdenum mine which is the other mine at the site as well. That’ll double up the numbers. You’re looking at generating tax revenues somewhere in the region of 150 million dollars over 10 years and in mining they say for every direct job there are six indirect jobs so you run into essentially full outputs into thousands of indirect jobs that will revitalize a town that in its day had 40,000 residents and now has just over 700 so you can see that this will have a profound effect on the town of Sangdong.
Q. Speaking of tungsten supply, can you tell us about the challenges that come from the limited supply of tungsten metal as the world is heavily relying on China for these materials?
LEWIS: To 85 percent of the world’s output of tungsten comes from China and this really culminates in the 80s, the middle to late 80s where a lot of Chinese material hit the market. Prices collapsed and pretty much everyone went out of business. One or two survivors, but that was it. Those survivors are still with us. One we own in Portugal, the other one is in Austria which is owned by Sandvik but that’s pretty much it that survived that blood bath in the late 80s and then of course we’ve seen subsequently very difficult to then open up minds because that knowledge all disappeared. It all vanished and it’s a very difficult as I said before it’s a very difficult metal to process.
SENATOR: And unfortunately the Sangdong mine located in South Korea, one of the greatest mines in the world became victim to the Chinese dumping because they couldn’t sell their product, they couldn’t compete so I guess it goes back to about 1992 when the government closed the Sangdong mine, a mine that had the greatest concentration of high quality tungsten. There’s none that was better and it was closed down, it was closed down because they could not make sales because the Chinese, by dumping at prices that no one could compete with put them out of business. Now the world cannot afford to be held hostage by the Chinese government. Just cannot do it.
Q. The U.S. is currently having a trade war with China and if most of the metal supply comes from China, the current U.S.-China trade war must be putting a huge strain on U.S. manufacturers so Senator, how do you see this ongoing trade war between the two countries and how do you assess the damages?
SENATOR: This is a strategic alloy which is necessary in so many areas, the medical area, the defense area, the manufacturing area, as we find more technological ways to go forward. We should be working in this cooperative way. What a great opportunity for South Korea to reinvigorate its economy to keep it growing, to keep it moving and not be held under the fear and dominance of the Chinese.
Q. So you said that we shouldn’t be held captive. So do you think U.S. manufacturing companies should find ways to reduce dependency on China?
SENATOR: Not only U.S. companies but companies throughout the Western Hemisphere as well. So much in terms of manufacturing and other areas, health etc., the United States passed legislation which made it possible for the Chinese state enterprises to take political interference, media censorship, bifurcated internet situations and I think the pandemic has got certainly the American public waking up to the danger of creating monopolies that China will use to its advantage at the disadvantage of other countries. We can’t afford to be held hostage whether it’s tungsten or whether it’s the creation of medical supplies and strategic areas. We just can’t do it and this project will absolutely put South Korea on the map in terms of dealing with this problem of tungsten. It’s a small problem but let me tell you, it touches many people’s lives.
Q. So more on the operation in Korea, Almonty is making a big move investing millions of dollars in developing the Sangdong mine so were there any challenges in funding this multi-million dollar project or have you faced other difficulties when communicating the project with local residents?
LEWIS: You know, it obviously took time to attract the type of lender we were looking for. We ended up with a lender who is considered to be one of the most conservative and maybe do one every 18 months, maybe. Most of the projects they do are essentially vast projects for major mining companies. They also build nuclear power stations, hydroelectric dams, car factories so KfW (Kreditanstalt fur Wiederaufbau) and currently KfW is bailing out the German economy so it’s a very significant lender but they have a 100 track record of not having one default or one bankruptcy of any mine that they’ve supported so they’re extremely cautious about who they choose to support and they were, like we were, very impressed with not just the project itself but the environment that it sits in the community and the availability of of good highly skilled people and the political support, both local, regional and central.
Q. Korea has become a highly environmentally conscious country that is strongly dedicated to green growth. So how can an industry like mining which is traditionally known to be environmentally risky fit into Korea’s green growth paradigm?
LEWIS: Well, to be honest, Korea is not alone. We operate in Europe and Europe has, for many years, taken a very green view of how to operate and our lenders which is the German state bank KfW IPEX-Bank and obviously the Austrian government export credit bank OeKB, they have required this project be designed to what’s called ‘Equator Principles.’ Equator principles are international standards that are far superior to current international standards for social and environmental activity and so we all generate no waste on surface. We’ll generate no tailings on surface. Everything is essentially to be as little as low impact as possible and in fact our long-term goal because currently the energy from the platform to the mines is nuclear. It’s from the local nuclear power station. There is no reason why we will not become carbon neutral. Ultimately all the equipment underground will be electric so in this day and age you have to learn to operate in an environmentally sensible and responsible way.
Q. Can you walk us through what Almonty is ensuring with the workers so that they can ultimately be safe, happy and obviously well compensated?
LEWIS: So in all of our projects we have an intrinsic link with the community. After all the community ultimately operates the mine and so we’ve always had a very long-standing relationship whether it be from sports centers to working with education, whether we’re working on scholarships. Every community has different needs and we have to work with it.
Q. Production, manufacturing industries have been hit hard by COVID-19 and of course mining operations must also have been experiencing disruptions and shutdowns so how is your company coping with the situation?
LEWIS: The mines are relatively in rural areas so they’re not in high density area so we have our isolation which has certainly served us well at this time. Our biggest issue has been actually shipping. Shipping has been significantly hit so our production has remained consistent and at normal levels but shipping times have increased by almost threefold so that’s been more problematic for our customers but there’s nothing we can do about this.
Q. For U.S. citizens in the U.S., how do they view this project for America?
SENATOR: I think that the relationship that we have is in a good place. The development of this strategic material and make no mistake about, tungsten is a rare earth and it has become known now as critical throughout the world so this is our mutual interest. It is economically advantageous for the entire world to have a supply of critical materials that is not going to be used in a way to hurt other nations but rather to give other nations greater opportunity. So I see this mind as a critical element in strengthening that bond.
The principal business of Toronto, Canada-based Almonty Industries Inc. is the mining, processing and shipping of tungsten concentrate from its Los Santos Mine in western Spain and its Panasqueira mine in Portugal as well as the development of its Sangdong tungsten mine in Gangwon Province, South Korea and the development of the Valtreixal tin/tungsten project in north western Spain.
The Los Santos Mine was acquired by Almonty in September 2011 and is located approximately 50 kilometres from Salamanca in western Spain and produces tungsten concentrate. The Panasqueira mine, which has been in production since 1896, is located approximately 260 kilometres northeast of Lisbon, Portugal, was acquired in January 2016 and produces tungsten concentrate.
The Sangdong mine, which was historically one of the largest tungsten mines in the world and one of the few long-life, high-grade tungsten deposits outside of China, was acquired in September 2015 through the acquisition of a 100% interest in Woulfe Mining Corp.
Almonty owns 100% of the Valtreixal tin-tungsten project in north-western Spain.
Further information about Almonty’s activities may be found at www.almontystaging.wpengine.com and under Almonty’s profile at www.sedar.com.
The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about and observe such restrictions. Neither TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.
Disclaimer for Forward-Looking Statements
When used in this press release, the words “estimate”, “project”, “belief”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may” or “should” and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. This press release contains forward-looking statements. These statements and information are based on management’s beliefs, estimates and opinions on the date that statements are made and reflect Almonty’s current expectations.
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Almonty to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: any specific risks relating to fluctuations in the price of ammonium para tungstate from which the sale price of Almonty’s tungsten concentrate is derived, actual results of mining and exploration activities, environmental, economic and political risks of the jurisdictions in which Almonty’s operations are located and changes in project parameters as plans continue to be refined, forecasts and assessments relating to Almonty’s business, credit and liquidity risks, hedging risk, competition in the mining industry, risks related to the market price of Almonty’s shares, the ability of Almonty to retain key management employees or procure the services of skilled and experienced personnel, risks related to claims and legal proceedings against Almonty and any of its operating mines, risks relating to unknown defects and impairments, risks related to the adequacy of internal control over financial reporting, risks related to governmental regulations, including environmental regulations, risks related to international operations of Almonty, risks relating to exploration, development and operations at Almonty’s tungsten mines, the ability of Almonty to obtain and maintain necessary permits, the ability of Almonty to comply with applicable laws, regulations and permitting requirements, lack of suitable infrastructure and employees to support Almonty’s mining operations, uncertainty in the accuracy of mineral reserves and mineral resources estimates, production estimates from Almonty’s mining operations, inability to replace and expand mineral reserves, uncertainties related to title and indigenous rights with respect to mineral properties owned directly or indirectly by Almonty, the ability of Almonty to obtain adequate financing, the ability of Almonty to complete permitting, construction, development and expansion, challenges related to global financial conditions, risks related to future sales or issuance of equity securities, differences in the interpretation or application of tax laws and regulations or accounting policies and rules and acceptance of the TSX of the listing of Almonty shares on the TSX.
Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to, no material adverse change in the market price of ammonium para tungstate, the continuing ability to fund or obtain funding for outstanding commitments, expectations regarding the resolution of legal and tax matters, no negative change to applicable laws, the ability to secure local contractors, employees and assistance as and when required and on reasonable terms, and such other assumptions and factors as are set out herein. Although Almonty has attempted to identify important factors that could cause actual results, level of activity, performance or achievements to differ materially from those contained in forward-looking statements, there may be other factors that cause results, level of activity, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate and even if events or results described in the forward-looking statements are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, Almonty. Accordingly, readers should not place undue reliance on forward-looking statements and are cautioned that actual outcomes may vary.
Investors are cautioned against attributing undue certainty to forward-looking statements. Almonty cautions that the foregoing list of material factors is not exhaustive. When relying on Almonty’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events.
Almonty has also assumed that material factors will not cause any forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
The realization of the benefits of the Amended Off-Take Agreement are subject to risk factors typical of a supply agreement of this nature including if the Company is unable to meet its obligations to deliver tungsten concentrate in accordance with the terms of the Amended Off-Take Agreement, variable costs of shipping and production over the term of the contract, the Customer’s ability to purchase the tungsten concentrate produced by Almonty at the mine and the continued economic viability of the Customer or its successors for the life of the Amended Off-Take Agreement. Finally, given these risks, there is no guarantee that the Company will realize the revenues contemplated under the terms of the Amended Off-Take Agreement.
THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE EXPECTATIONS OF ALMONTY AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE ALMONTY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.