The US is betting heavily on the local tungsten supply chain! Elmet (ELMT.US) received an investment promise of 450 million US dollars from the Ministry of War + 2 billion US dollars, and the stock price of the defense order skyrocketed in response

The Zhitong Finance App learned that Elmet Group (ELMT.US), a manufacturer that provides key materials and high-power microwave products for the aerospace and defense sector, announced on Monday that the company has received an investment of 450 million US dollars promised by the US Department of War to expand tungsten ore mining, processing and manufacturing capacity. Additionally, Elmet Technologies, a wholly-owned subsidiary of the company, was awarded a contract of up to 2 billion US dollars from the US Defense Logistics Administration to supply tungsten materials to the US National Defense Reserve. Boosted by this news, as of press release, Elmet Group's pre-market share surged by more than 43% on Monday.

$450 million investment commitment + $2 billion defense deal

Elmet Group said the US War Department's investment of $450 million will first disburse $200 million when the deal is completed, followed by additional funding. More than $165 million of this is expected to be spent on operations in Maine, Michigan and Ohio, where plants are responsible for manufacturing and processing tungsten, molybdenum, and other advanced materials and components, the company added. The investment will also support Elmet Group's mining and processing investments in the US, Australia and Spain. Additionally, Elmet Group is establishing Elmet Refining & Trading, a new division to coordinate raw material procurement, processing, and material delivery within the company's network.

According to the deal arrangement, the US Department of War will receive redeemable preferred shares of Elmet Group, warrants equivalent to up to 19.9% of Elmet Group's common shares after completion of the transaction, and the right to appoint an independent director and a non-voting board observer.

Additionally, Elmet Technologies obtained an indefinite-delivery/indefinite-quantity (IDIQ) contract from the US Defense Logistics Administration. The contract is capped at $2 billion and includes a guaranteed funding commitment of $150 million.

The contract covers tungsten ore, tungsten concentrate, and sodium tungstate, and is supplied to the US Defense Logistics Administration's Strategic Materials Division (DLA Strategic Materials) to support the reconstruction of US national defense reserves. The basic subscription period for this contract is 5 years, and lasts until August 30, 2031, with the option of extending it for 2 years, up to August 30, 2033.

Elmet Group said the company has no intention of delivering related materials to defense reserves until sufficient additional supply is obtained through mining investments, offtake agreements, and expansion of processing capacity. Delivery is expected to be carried out in stages as additional production capacity is put into operation one after another.

Springer tungsten complex investment plan! Up to $175 million

Also on Monday, Elmet Group, along with Blue Moon Metals (BMM.US) and EQ Resources, announced binding terms to provide a $150 million to $175 million investment package for the Springer tungsten complex in Nevada to strengthen the US tungsten supply chain.

Under the arrangement, Elmet Group plans to allocate approximately US$150 million for Springer related transactions. The program also included providing $50 million in tungsten prepayment financing to Blue Moon, investing $25 million in Blue Moon, and investing $75 million in the Springer Ammonium Paratungstate (APT) plant joint venture. An additional $25 million is a back-up funding commitment from Elmet Group and EQ Resources to meet the capital requirements needed to resume production at the Springer APT plant.

According to Blue Moon's announcement, out of the $450 million investment provided by the US Department of War to Elmet Group, $150 million has been earmarked for these Springer related transactions. The transaction is still subject to due diligence, approval from regulators and exchanges, and a final agreement.

Boosted by this news, as of press release, Blue Moon's US stocks rose nearly 20% before the market on Monday.

According to reports, after the planned investment of 75 million US dollars is completed, it is expected that Elmet Group will hold 70% of the Springer APT factory joint venture, Blue Moon will hold 20% of the shares, EQ Resources will hold 10% of the shares, and Springer will be responsible for operating the plant.

The target production capacity for the first phase is 4,000 tons per year. In this phase, Blue Moon will continue to own and operate 100% of the Springer mine and beneficiation plant. Currently, neither the mine nor the beneficiation plant is in production. Blue Moon aims to resume production in the fourth quarter of 2027, while the Springer APT plant aims to restart in the second half of 2028. Blue Moon received regulatory approval in August, allowing construction of the Springer project to continue.

US wants to strengthen local tungsten supply chain

The US Department of War's $450 million investment commitment to Elmet Group, a $2 billion contract offered by the US Defense Logistics Service, and Elmet Group, Blue Moon, and EQ Resources' investment in the Springer tungsten complex all indicate that the US is seeking to strengthen its domestic tungsten supply chain.

The supply side faces multiple structural constraints. China accounts for about 80% of the world's tungsten ore production, but it itself is also facing the double pressure of declining resource grade (the WOgrade of major mining areas in Jiangxi has dropped from 0.40% to less than 0.28%) and policy tightening (6.5% reduction in mining quotas in 2025). In February 2025, China added various key metals, including tungsten, to the export control list, which directly led to a significant drop in the available supply of APT and tungsten oxide in the Western market.

The demand side was simultaneously ignited by the two major engines of artificial intelligence (AI) and defense. Tungsten hexafluoride (WF) is the first material needed for the TSV process in HBM and 3D NAND manufacturing. Global demand is expected to increase from 9,000 tons in 2025 to 15,000 tons in 2030, corresponding to a net increase of 3,700 tons in tungsten demand. In terms of PCB drills, the number of PCB layers on AI servers has jumped from the traditional 12-16 layers to 24-40 layers, and drill loss has increased dramatically. The net tungsten requirement for 2025-2030 is estimated to be 789 tons.

A more critical catalyst is the new US defense procurement regulations that will come into effect on January 1, 2027. At that time, the US defense supply chain will ban the use of tungsten “covering materials” mined, produced, or processed in “concerned countries” (including China, Russia, North Korea, and Iran), and the requirement can be traced back to the mine level. This means that large existing global commercial stocks will not be able to meet US defense application requirements, forcing the Western military system to structurally decouple China's tungsten supply.

In the face of an imbalance between supply and demand, global tungsten prices experienced a historic surge. The global benchmark ammonium paratungstate (APT) price has soared from about 300 US dollars/ton five years ago to more than 3,000 US dollars/ton, an increase of about ten times. The European APT CIF price is currently stable in the range of 2,900 to 3,100 US dollars/ton, while the domestic price in China is about 595,000 yuan/ton, and the price difference between China and foreign countries has widened to about 2,000 US dollars/ton.

It is worth mentioning that in addition to the contracts and deals mentioned above, the latest news about the US and the West seeking to strengthen the tungsten supply chain also includes that the US mining company Almonty Industries (ALM.US) has reached a landmark cooperation agreement with the Rwandan government. According to the binding agreement disclosed on September 14, Rwanda will provide exploration concessions and processing licenses in exchange for 25% of Almonty's local subsidiary shares, and Almonty will retain ownership of the remaining 75%. This deal is not only a key step in Almonty's global expansion strategy, but also marks the first time that the West is systematically reaching deep into the African continent in the process of building a “de-Chinesized” tungsten supply chain.

Rwanda is the only African country among the top ten producers of tungsten in the world, which makes it highly strategic in the West's efforts to diversify its supply chain. Currently, Vancouver-based Trinity Metals operates the continent's largest tungsten mine, the Nyakabingo mine, in Rwanda. Since reaching an offtake agreement last year, the company has delivered more than 320 tons of high-grade concentrate to a processing plant in Pennsylvania, USA, supplying 20% of the US primary tungsten concentrate consumption.

Almonty CEO Lewis Black made it clear in an interview that the US government helped facilitate this collaboration and provided political support, but did not directly fund it; the products will be sold to customers in the US, Europe, Japan, and South Korea.