On 2 September, Australia-based EQR announced that it had signed a multi-year offtake agreement for tungsten concentrate with USA-based Elmet. Elmet is a fully integrated tungsten and molybdenum manufacturer with three production facilities, located in Maine, Ohio, and Michigan. The company supplies the global defence, lighting, electronics, semiconductor, thin-film, automotive, aircraft, and medical industries.

EQR is a mining, processing, and exploration company focused primarily on tungsten production. The company operates the Mt Carbine Operation in Queensland, Australia, which comprises a mine, processing plant, and quarry. Additionally, EQR operates the Barruecopardo Mine in Salamanca, Spain, through its Spanish subsidiary, Saloro. According to EQR’s latest quarterly report, the Mt Carbine asset produced 382t of WO₃ in H1 2024, while the Barruecopardo Mine produced 463t of WO₃ during the same period.

As per the agreement, Elmet will purchase tungsten concentrate worth AU$30M (US$20.3M) from EQR over a five-year period. Elmet can secure the contract by making an advance payment of AU$2M (US$1.3M) to EQR. As such, EQR will offer Elmet 20,000,000 shares at AU$0.1 per share, with this offer to remain valid for two years. However, EQR and Elmet have agreed to sign definitive agreements within the next four weeks.

EQR and Elmet aim to establish a sustainable and resilient supply chain for critical raw materials, ensuring a steady supply for Elmet’s customers in the US defence, aerospace, medical, and semiconductor industries. EQR notes that “Elmet directly and indirectly feeds the defence sector with their molybdenum and tungsten products…” so it is well positioned to support sectors critical to US industrial and military priorities. Project Blue forecasts that military demand (and strategic stockpiling) will be one of the fastest growing segments for tungsten demand over the growing years.

The agreement is reflective of today’s policy environment. Specifically, the deal is aligned with key provisions of the REEShore Act of 2022, which mandates that no tungsten sourced from China may be used in US military equipment by 2026 and requires the USA to build out its tungsten stockpiles by 2025. In addition, EQR serving as a supplier to Elmet fits under Title III of the US Defense Production Act, whereby Australian products and raw materials, including tungsten, are recognised as “US domestic sources”.

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