Tungsten has a quiet week

By Leia Michele Toovey- Exclusive to Tungsten Investing News

It was a low key week for tungsten, as an oscillating dollar and a Hurricane Gustav-instigated pressure on crude turned the market focus to industrial metals.

Banking on an upswing in the price of the alloy-metal, Vital Metals Inc (VML.AX) announced that it planned on commencing production at its Watershed Tungsten mine in Australia in 2010. Production rate is estimated to be 1,200 tonnes per annum. At peak production, this will account for approximately 2 per cent of world demand.

In China, state-owned Guangdong Guangsheng Nonferrous Metals Group has obtained China Securities Regulatory Commission’s approval to list its tungsten and rare earth assets on the Shanghai Stock Exchange through a share-asset swap with Shanghai listed Hainan Xingye Polyester Co Ltd. After the swap, Guangsheng Nonferrous will hold a 50.02 per cent controlling stake, a total of 124.76 million shares, in Xingye Polyester. The asset swap will involve Guangsheng selling its interests in 14 rare earth related subsidiaries in return for 36 million shares in Xingye Polyester. Through the swap, a new listed company will be formed that will hold various assets held by Guangsheng’s subsidiaries including five tungsten mines. Combined, the tungsten mines will contain a 1.15 million tonnes of 65 per cent grade tungsten. In addition, two rare earth mines which are expected to produce approximately 1,000 tonnes of rare earth dioxide in 2008.

Guangsheng Nonferrous also plans to construct two rare earth smelting bases in Xinfeng and Heyuan and a rare earth processing facility in Heyuan. Guangsheng Nonferrous will further secure its tungsten reserves through deep exploration and acquisitions and construct tungsten processing facilities that produce high value added tungsten products. Guangsheng Nonferrous also owns exploration rights to the Shilu copper deposit and the Houpo’ao silver deposit, both the largest deposits of their kind in Guangdong Province. The company is applying for mining rights to the copper deposit while continuing a feasibility study on the development of the silver deposit.

Globally, China is the largest producer, and consumer, of rare metals tungsten and molybdenum. They have controlled the world market of these metals by keeping exports on a short leash. On September 1, China announced export quotas for these two metals. The total export quota for tungsten in 2008 is 18,792 tonnes. There have been no comments on the amount of tungsten this is, but the pressure on the molybdenum market due to the quotas is apparent. So far in 2008, molybdenum exports are down 26 percent when compared to the 2007 figures.

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