Wolf Minerals’ (LON:WLFE) boss expects more casualties among rival tungsten producers unless the price of the heavy metal improves substantially, he told investors today.
A number of private tungsten mines in China have shut, while another big tungsten mine in Canada, Cantung, run by North American Tungsten, was closed last month.
China remains the main source of tungsten production globally but state-owned enterprises are cutting back.
The tungsten price needs to recover to at least US$30,000 per tonne from around US$17,000 currently for these producers to remain profitable warned Russell Clark, though he’s not concerned.
Wolf only opened the Drakelands mine, a £140mln tungsten mine on the fringes of Dartmoor, Devon, in September, but he remains confident on the project’s future.
“Everyone is hurting at these prices,” he said, “but we remain comfortable that they are not sustainable.”
“The silver lining,” he said, “is that while the price is what it is, you won’t see any more mines or projects coming online.”
Clark reckons the price will rebound, as demand remains strong and supply is slowing down, but he’s not resting on his laurels.
He said Wolf will continue to cut costs where possible once the ramp-up phase of the mine has been completed and until the market come out of “the doldrums”.
When the company first commissioned the project the tungsten price was around US$35,000, per tonne.
Shares were 3.5% higher to almost 13p.