Why the Pentagon just dropped $450M on tungsten mining

The Defense Department announced this month a $450 million investment in The Elmet Group to strengthen the U.S. supply chain for tungsten, a critical mineral used for manufacturing military weapons ranging from bullets to missiles.

The investment comes as a federal procurement rule barring tungsten mined, refined, or processed in China, Russia, Iran and North Korea from defense applications nears its Jan. 1 deadline.

In the announcement, the Defense Department said it chose to invest in Elmet because it is “the only U.S.-owned, fully integrated producer of tungsten and molybdenum materials and components.”

“This investment reflects the Department’s commitment to rebuilding critical industrial capacity in the United States,” said Michael Cadenazzi, the Defense Department’s assistant secretary for industrial base policy.

He added that it will “strengthen supply chain resilience, support high-quality manufacturing jobs, and reinforce the production base behind essential defense systems.”

Chris Berry, a critical-minerals analyst, explained on his podcast that China dominates the global tungsten supply chain, while the U.S. has not mined tungsten since 2015.

Although ongoing conflicts in Ukraine and Iran have increased pressure on tungsten demand, Berry argued that its rising price is “due almost exclusively to policy choices in Beijing and Washington.”

“The free flow of tungsten material is for now a thing of the past,” he said, adding that those policies have created “two distinct markets” and driven a rapid increase in prices.

According to government data, China controls about 85% of the world’s tungsten supply and 40% of its molybdenum, a similar material that is often mined in the same areas.

While tungsten is primarily used to make tools for manufacturing, Berry said the metal is also used for fabricating semiconductors for AI data centers and he called it “a must-have” for the defense industry because of its unique properties.

Tungsten has the highest melting point of any metal and is roughly as dense as gold. When combined with carbon, it forms tungsten carbide, an extremely hard material used in industrial and military applications.

“There’s no good substitute at scale for most of these applications,” Berry said, describing tungsten demand as relatively small in absolute terms but highly resistant to price changes.

However, mining more tungsten is only part of the challenge, Berry said. The country also needs the ability to refine and process the metal into usable materials.

“Every mined dollar should be paired with a processing dollar,” he said, adding that other potential remedies include price protection, defense stockpiling and greater reliance on allied suppliers to spread supply-chain risk.

According to the announcement, the company supports more than 100 defense programs, including Patriot, Javelin, AEGIS, Trident II and THAAD, as well as Virginia- and Columbia-class submarines.

Elmet, based in Portland, Maine, was founded privately in 1929 but went public earlier this year. It will use $165 million of the funds to upgrade domestic manufacturing operations in Maine, Michigan and Ohio to increase productivity.

The company said in a press release that it will put approximately $150 million toward restarting tungsten mining operations in Imlay, Nevada; and another $100 million for establishing a refining and trading division to support access and international partnerships.

Since the agreement, Elmet said it has secured agreements for mining operations with Tungsten West in England and the Vietnam-based Masan High-Tech Materials Corporation.