If China curbs tungsten supply, will prices stabilize?

By Leia Michele Toovey- Exclusive to Tungsten Investing News

Tungsten, like all other metals has witnessed a precipitous price drop.  Data coming out of China, producers of around 85 per cent of the world’s tungsten, shows that most of the Chinese Ferro-tungsten makers have either shut down or decreased output.

Most producers are confident that the low for the metal used in military applications is only for the short term. With China having such a monopoly on the market a ubiquitous output slash may stabilize the price. The future, however, remains unclear.  We have seen an unprecedented amount of mine shutdowns in the other metals, all to no avail at controlling the quick drop in prices.

Company news

Newcrest Mining may limit gold extraction at Australia’s largest gold mine, the Telfer mine, and instead turn its focus to mining a nearby tungsten deposit.  Newcrest was debating selling the O’Callaghans deposit but will instead look into mining it, fundamentally changing the production profile of the big Pilbara mine. The intention to develop the O’Callaghans deposit comes as Newcrest tries to cut costs and debates plans flagged three months ago regarding selling the deposit. Newcrest believes that by extracting the tungsten they could appreciably boost revenues.

“We mainly consider O’Callaghans as a way we can configure Telfer to push it further down the cost curve for the long term,” company President Smith said yesterday after the company’s annual meeting in Melbourne. “The Chinese have restricted exports of tungsten so there is a restriction in supply points around the world.” Resource project buyers have lost their appetite over the past three months as global markets have gone into meltdown, but Smith said Newcrest would still sell at the right price. To mine O’Callaghans, which also contains copper, lead and zinc, the plant at Telfer would need to cut back on ore from the main pit, meaning reduced gold production of up to 10 per cent. A timetable for developing the deposit, which was only discovered about five months ago, is expected to be revealed later this year with a resource statement.

Golden Predator Mines Inc. (TSX:GP) will receive CDN $1 million plus accrued interest from Midway Gold Corp. pursuant to amendment and early repayment of a loan facility provided by the Company to Midway earlier this year. On July 17, 2008, Golden Predator and Midway Gold Corp. announced that the two companies entered into a term sheet describing the principal terms of a proposed business combination. On September 15, 2008 the term sheet expired and the business combination did not proceed. Pursuant the term sheet, Golden Predator agreed to provide a loan facility of $5 million to Midway that could be drawn in installments of $1 million. On August 28, 2008 Golden Predator advanced $2 million of the facility to Midway. In exchange for the advance, Midway issued a promissory maturing with interest at prime plus 2 per cent on July 16, 2009.Golden Predator and Midway have mutually agreed to release each other from all matters related to the Term Sheet and Midway has agreed to pre-pay Golden Predator $1,000,000 of the loan amount advanced, together with accrued interest.
Oriental Minerals Inc. (TSX.V: OTL), has negotiated a deferment of the $1.2 million vendor payment obligation on the Sangdong tungsten-molybdenum project in South Korea.  The payment due November 30, 2008, has now been deferred to April 30, 2009. Ian Fodie, Oriental Minerals’ President and CEO said, “We are very grateful to Sangdong’s vendor,  Sim, for his continued support of Oriental Minerals during these challenging times in the capital markets.  This deferment gives us more flexibility as we move toward the completion of the Sangdong PEA.”

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