Loss of Balance between Tungsten Reserve and Mining,China’s Resource Advantage Is Weakening

China’s tungsten reserve, product output, export trade volume and consumption all rank top in the world. By offering supply for more than 80% global tungsten consumption with less than 50% of global tungsten ore resource, China has made significant contribution to the development of global tungsten industry. China’s tungsten ore types are dominated by white tungsten ore, and supplemented by black tungsten ore and black-white mixed tungsten ore, yet there are many lean ores, many refractory ores, and many intergrown and associated ores, the resource utilization rate is low, mining cost is high. Although China has great potential in tungsten resources, its economic reserve has dropped rapidly, the Reserves to Production Ratio (R/P ratio) has lost balance, judging from resource endowment conditions, mining status quo and tungsten sector’s long term strategic development, the prospects of China’s tungsten resources does not allow for optimism.

China’s tungsten resources are distributed in 23 provinces (municipalities, autonomous regions). According to preliminary statistics,there are 382 tungsten ore deposits across the nation, which are mainly concentrated in Hunan, Jiangxi, Henan, Gansu, Guangdong, Guangxi, Fujian and Yunnan. The proved tungsten resources reserve in the 8 provinces accounts for 85% of national proved tungsten resources reserve. Wherein, Hunan Province ranks top nationwide, accounting for 32% of national proved resource reserve.

China’s tungsten ore is dominated by white tungsten ore, and supplemented by black tungsten ore and black-white mixed tungsten ore, wherein: white tungsten ore’s proved resource reserve accounts for 68.54%; black tungsten ore’s proved resource reserve accounts for 22.20%; black-white mixed tungsten ore’s proved resource reserve accounts for 9.26%.

In white tungsten ore, ore deposit with geological grade of more than 80% is below 0.4%, and the components are complicated. Intergrown and associated white tungsten ore deposits account for 70% of total white tungsten ore deposits. There are many varieties of components intergrown and associated with tungsten ore,which mainly include: Tin, molybdenum, bismuth, copper, lead, zinc, gold, silver, iron, sulfur, niobium, tantalum, lithium, beryllium, rare earth, dispersed elements such as gallium, indium, thallium, rhenium and non metal ore arsenic and fluorite etc., in which white tungsten ore mainly intergrows and associates with non ferrous metal and precious metal; black tungsten ore mainly intergrows and associates with ferrous metals, heavy rare earth, rare scattering elements. The disseminated grain size of useful mineral is small, the concentration recovery rate is low, many mineral ores are difficult for recycling and utilization.

Among the existing active tungsten mines,most white tungsten ore’s concentration recovery rate is below 65% under existing technological condition, l5~20 percentage points lower than the concentration recovery rate of black tungsten ore. According to survey results of China Tungsten Industry Association on five typical intergrown and associated, and mixed white tungsten mining zones, their resource reserve accounts for 36.7% of national total, yet the resource utilization rate is only 51.3%, l6

percentage points lower than black tungsten resource utilization rate, the overall resource utilization standard is low.

In 2010 China’s tungsten basic reserve decreased by 21.47% compared with that in 2001;the proved resource reserve increased by 1.32%. China’s tungsten resources showed an overall decreasing status, economic reserve has dropped, R/P ratio has lost balance, its resource advantage is gradually declining, the resource security situation does not allow for optimism.In particular, the loss in black tungsten ore resource is obvious, in 2010 black tungsten basic reserve decreased by 51.01% compared with that in 2001, its percentage in total basic reserve dropped from 30.05% to l8.75%.

China’s tungsten ore is characterized by extensive mining scale, the R/P ratio continued to drop. In 2010 the R/P ratio is only 19.5 years,1/4 lower than overseas R/P ratio, and 19.6 years less than that in 2001.

According to statistics of the China Nonferrous Metals Industry Association, in 2010,China’s tungsten mining capacity (converted to tungsten metal) is 56,000 t/a, dressing capacity is (converted to tungsten metal) is 75,000 t/a,up by 33.33% and 25.00% compared with those in 2006 respectively. Owing to the decline in resource grade, the growth in the converted tungsten concentrate production capacity is smaller than the growth in ore processing ability.

From the discovery of tungsten ore in Dayu,Jiangxi, in 1907 till now, China’s tungsten ore mining has a history of more than 100 years. In 1914 the output is less than l0 tonnes (converted to tungsten metal). After the breakout of WWI, global countries’ demand for tungsten rose sharply, tungsten price soared. In 1918 China’s tungsten ore output reached 5020 tones(converted to tungsten metal), accounting for 33.1% of world total, and ranking top in the world. After that, excluding a few individual years, it continued to rank top in the world.

For a long time in the past, Chin mainly mines black tungsten ore resource, its output for a certain period accounted for over 90% of tungsten concentrate output, which is mainly concentrated in Jiangxi and Hunan. After years of development, black tungsten resources diminished year by year, with the improvement in white tungsten ore dressing and smelting technologies, the development and utilization of white tungsten resources increased steadily over the years. At present, the percentage of black tungsten ore output drops to around 60%.According to statistics, from l914 to 1948, China has produced a total of 112,600 tonnes of tungsten concentrate (converted to tungsten metal, the same below), which was almost completely exported, accounting for 29.8% of global output: From l949 to 2000 China produced a total of 1,052,900 tonnes of tungsten concentrate, accounting for 46.85% of global production; from 2001 to 2010 China produced a total of 44.7500 tonnes of tungsten concentrate, accounting for 79.53% of global production, with an annual average growth rate of 7.18%.

According to preliminary statistics, in 2011 China’s tungsten concentrate output was 62,800 tonnes (converted to tungsten metal).China’s tungsten ore output is concentrated in Jiangxi and Hunan, in recent months, Henan Province’s output showed considerable increase; the three provinces’ output accounts for 84% of national total output.

According to the two legal documents of “Protocol on the Accession of China” and “Report Of The Working Party On The Accession of China”, after China joins WTO it still retains state trading management rights over 13 tungsten and tungsten product varieties, for which the government will designate a limited number of companies for exclusive operation.There are now 13 state trading enterprises with qualification for tungsten product export.

Primary and intermediate grade tungsten smelting products subject to export quota management include: Ammonium paratungstate, ammonium metatungstate tungsten, tungsten acids and salts, tungsten trioxide and blue tungsten oxide, tungsten powder and products totaling 9 varieties. Tungsten products not yet subject to export quota management include: Self or mixed with metal adhesive unsintered metal carbides, Ferro-tungsten, Ferro-silico-tungsten,unwrought tungsten includes simply sintered strip, bar, tungsten filament, waste tungsten scraps, tungsten strip, bar, profile and irregular shape products, plate, sheet, strip, foil, carbide tip, and tools.

Since 2000, China implemented quota management on export of primary and intermediate grade tungsten products; the annual decrease in quota is around 3%.

In the recent 5 years, excluding 2009 when the export of tungsten products dropped due to the global financial crisis, the export of China’s tungsten products stayed at 30,000 tonnes(converted to tungsten metal), accounting for over 80% of overseas tungsten consumption.

According to preliminary statistics, in 2011 China’s tungsten consumption was 33,000 tonnes (converted to tungsten metal), up by 27.6% compared with 2006, showing an average annual growth of 6.3% within the past 5 years.

China attaches great importance to tungsten geological prospecting and comprehensive utilization of tungsten resources. The State Council Executive Meeting has passed “Outline of Prospecting Breakthrough Strategic Move(2011-2020)”, which clarified the targets and missions of China’s geological mineral resource prospecting work for a certain period in the future; by implementing prospecting strategy, it aims to achieve new significant breakthroughs, develop a group of key mineral resource strategic succeeding zones, build up key mineral resource reserve system, so as to provide powerful resource guarantee and industry

support for stable and relatively fast economic growth; carry out succeeding resource prospecting in the depth and peripheral areas of old mines, extend mine service years: Implement enterprise-dominated model projects for mineral resource saving and comprehensive utilization, develop circular economy in mineral resource fields. The Ministry of Land and Resources has printed and distributed the‘“Twelfth Five Year” Plan for Saving and Comprehensive Utilization of Mineral Resources’, which clarified the four major tasks of conducting full survey on status quo and potentials in resource saving and comprehensive utilization, carrying out R&D and popularization of advanced applicable key technologies, constructing comprehensive utilization model base and model projects, and constructing long-term mechanism in resource saving and comprehensive utilization. According to preliminary info analysis, China has huge potentials in tungsten resource reserve. Wherein, in South Jiangxi –North Guangdong and South Hunan old mines,through investigation and survey prospecting work, new mines have been discovered in the depth and peripherals of many old mines in Xihuashan, Maoping, Taoxikeng, Dagushan, Hukeng, Yaogangxian, Huangshaping and Jiangxi Wuning tungsten mining zones. Some small to middle sized mineral deposits were upgraded to become large mineral deposits, with huge forecast potential for mine discovery, and equipped with excellent technology conditions for development. Meanwhile, in recent years, the state government has intensified prospecting efforts in five new mining zones with prospecting perspective including South Anhui (West Zhejiang), Central Jilin–Yanbian, North Qilian,Xinjiang–Qinghai Qimantag and North Tibet Jiagang, each of which reported new breakthroughs, it is estimated there are great prospecting potentials.

Although China’s self-owned tungsten ore resource reserve occupies advantageous position in the world, it has experienced excessive mining and rapid resource consumption. Judging from the tungsten ore resource endowment conditions, mining status quo and tungsten in-

dustry’s long term strategic development, the prospects of tungsten resources do not allow for optimism. The resource advantage is gradually weakening; the resource security situation is challenging.

Since the beginning of the new century, fueled by growth in demand, China’s tungsten ore output showed rapid growth. China is attaching increasing importance to health, safety and environmental protection in the process of tungsten ore mining, and tungsten smelting processing. Since 2002, it started to implement total volume control over tungsten ore mining,despite the ups and downs in the output of all tungsten mining zones, after 2005 the output stabilized, China’s total tungsten ore mining volume has been kept at around 50,000 tonnes(converted to tungsten metal) for 4 consecutive years. Its growth in the “Eleventh Five Year Period” grew by 12.3% compared with that in the “Tenth Five Year Plan” period.

In recent years, as the pace of tungsten ore resource integration quickened, tungsten ore mining and dressing technology and equipment standard have improved, in particular, white tungsten ore dressing and smelting technologies have improved significantly. Tungsten ore mining order experienced continual rectification and standardization, measures are implemented to continually control newly mined tungsten ore through application of mining license, illegal small mines were outlawed, the rectification of mining order received obvious results.National tungsten ore mining total volume has been put under control. The overall recovery volume of associated tungsten, low-grade tungsten and tungsten-containing mine tailing has increased, output of black tungsten ore has dropped. Total mining volume of tungsten ore has stabilized, the pattern of China’s tungsten raw material supply is becoming “balanced and slightly tight, stable and rational, moderate and orderly”. The supply flexibility of tungsten raw material market has decreased, tungsten ore mining cost rose, judging from long term perspective, due to resource scarcity, and tungsten’s special properties and applications, it is a gen-

eral inevitable trend for tungsten’s market price gradually recovers and rallies to reasonable level, this also coincides with the general trend of continual increase in the social exchange value of environment resources.

The development of tungsten ore resource presents a development pattern of diversified capital, large scale, intensive and standardized development, the total development volume is stable. Through integration of tungsten resources, the number of nationwide enterprises focusing on tungsten mine decreased from l43 in 2005 to l32 in 2009, middle sized and above tungsten mines increased from l2 in 2005 to 27 in 2009. For instance, Xintianling originally had 14 mines, with annual output of over 5000 tonnes; Malipo Core Tungsten Mining Zone has set up 23 mining rights, which included 11 exploitation rights, and 12 exploration rights,with 30 mines (entrances), more than 200 dressing factories, and an annual output of over 5000 tonnes; through resource integration, the output of these two mining zones dropped greatly; Guangxi Quanzhou Jiepai Tungsten Mining Zone has undergone overall rectification and were closed down. Guangxi Hezhou Shanhu Tungsten Mining Zone and Hunan Rucheng and Jianghua Tungsten Mining Zone have undergone rectification, the total mining volume is now kept under control; in recent years, there were only a few newly launched projects and mining/dressing technology upgrading and capacity expansion projects, the production output showed slight increase, the mining of newly built tungsten mines is now under control.

As the mining years lengthened, China’s black tungsten ore has dropped in resource grade, the resources diminished rapidly, the output decreased to some degree; as tungsten price rises,the overall recovery of refractory low grade intergrown and associated tungsten, white tungsten ore and black-white mixed tungsten ore output increased slightly. For instance, the recovery quantity of intergrown and associated tungsten from Henan Luanchuan Molybdenum Mining Zone has topped l0000 tonnes. The ra-tio between national black tungsten concentrate and white tungsten concentrate output has dropped from 7: 3 before 2007 to the now 6: 4.China’s tungsten resources are excessively mined, its economic reserve is being consumed rapidly. Its resource advantage is gradually weakening, despite the great potential in tungsten resources, the resource security situation does not allow for optimism; the development of tungsten ore resources presents a pattern of diversified capital, large scale, intensive and standardized development; the overall recovery volume of associated tungsten, lowgrade tungsten and tungsten-containing mine tailing has increased, output of black tungsten ore has dropped, total mining volume of tungsten ore has stabilized. The pattern of China’s tungsten raw material supply is becoming“balanced and slightly tight, stable and rational,moderate and orderly”; the supply flexibility of tungsten raw material has decreased; tungsten product export maintained growth, it is an inevitable trend that tungsten ore mining cost would rise, tungsten market price would gradually recover and return to reasonable level. This also coincides with the general trend of continual increase in the social exchange value of environmental resources.