EQ Resources responds to growing tungsten demand

EQ Resources (ASX: EQR) has entered five long-term offtake agreements for the next 24 months of production from its tungsten operations in Australia and Spain.

Based on the current pricing for tungsten, the total value of these agreements is estimated to be $195m (US$124m), representing volumes of 470 containers, each container holding 20mt of 50% tungsten trioxide concentrate.

These long-term offtake contracts have been executed with leading international tungsten consumers. EQR says the counterparties to these agreements are well-known producers of tungsten and tungsten-related products and considered to be in the top three producers in their respective markets, covering the production of ammonium paratungstate (APT), tungsten oxide and tungsten carbide materials— with all products subject to the recent export restrictions from China.

Under these agreements, EQR will supply about 25% of its production into Europe, 25% into North America, with the balance supplied to Asia.

These offtake agreements with North American and European consumers are significant given the recent export stop of a variety of tungsten products from China.

EQR chief executive Kevin MacNeill says the company’s global operations represent a significant part of the Western supply of tungsten concentrate.

“The recent move by China to more closely regulate the export of tungsten products has certainly triggered more interest in locking in volume supply of tungsten raw materials,” he said.

“We are pleased that we supply major Western producers on a long-term basis, while at the same time exploring ways to add value to our concentrate through the integration of downstream processing capacity.

“The global demand for tungsten is growing and our side we are fully committed for the next two years at least.

“The recent price increases have been fuelled by the China export control, resulting in great uncertainty for downstream customers. This in turn has led to customers looking to lock in future supply via long-term offtake arrangements.

“There is currently no timeline announced by when exports from China will resume.”

EQR’s production forecasts will cover product required to be delivered as part of these agreements as well as product required to support the operations of the proposed acquisition of the ferrotungsten smelter in Vietnam.