EQ Resources (EQR) signed a binding heads of agreement (HoA) with Tungsten Metals Group and Mr George (Guang Yu) Chen to acquire the world’s largest ferrotungsten plant outside China. 

On 18 November, EQR announced that it had entered into a binding HoA to acquire Asia Tungsten Products (Hong Kong). This Hong Kong-based company is a joint venture between the Australian-based Tungsten Metals Group (holding 60%) and Mr George (Guang Yu) Chen (holding 40%), a private partner.  

As per the agreement, EQR will acquire Tungsten Metals Group and its subsidiaries, including the Vietnam-based Asia Tungsten Products. In a separate deal, EQR will purchase Mr George (Guang Yu) Chen’s 40% interest in Asia Tungsten Products (Hong Kong) for an enterprise value determined by EQR at A$13.5M (US$8.8M). This valuation includes all liabilities as of the date of the HoA. If all required conditions are met and any necessary adjustments are made at the time of the deal’s closure, EQR has agreed to issue an estimated 170 million new fully paid ordinary shares and make a cash payment of A$2.5M (US$1.6M), funded through customer prepayments for ferrotungsten. In addition, EQR will assume the liabilities of Asia Tungsten Products (Hong Kong). All parties involved have committed to completing due diligence and finalising definitive agreements by late 2024, with the intention to complete the acquisition in the first half of 2025.  

Tungsten Metals Group operates the largest ferrotungsten plant outside China through its subsidiary, Asia Tungsten Products (Vietnam). Located in Vinh Bao, Haiphong, Vietnam, the plant commenced production in 2013 and has the capacity to produce 4ktpy of FeW. Recently, the plant has functioned as a toll treatment facility, sourcing feedstock from domestic and international suppliers.  

Project Blue sees this deal as a key strategic step by EQR to expand its presence in the tungsten market and become a major supplier independent of China. EQR currently provides tungsten concentrate from the Mt Carbine Mine in Australia and the Barruecopardo Mine in Spain. By adding a ferrotungsten plant to its portfolio, EQR will become a vertically integrated operation and enter the midstream market. This will be important for Europe and North America, where legislation limits the use of tungsten originating from China. For example, the USA’s REEShore Act prohibits the use of Chinese tungsten in military equipment by 2026 and stipulates that domestically sourced tungsten must be used to build up stockpiles by 2025. Furthermore, the EU’s Critical Raw Materials Act states that no more than 65% of the trading bloc’s annual needs for each strategic raw material at any processing stage should come from one outside country.