The United States makes a heavy bet on its domestic tungsten supply chain! Elmet (ELMT.US) receives $450 million investment commitment from the Department of Defense + $2 billion national defense contract, stock price soars.

According to Zhitong Finance APP, Elmet Group (ELMT.US), a manufacturer providing key materials and high-power microwave products for the aerospace and defense sectors, announced on Monday that the company has secured a $450 million investment commitment from the U.S. Department of War to expand its tungsten mining, processing, and manufacturing capacity. In addition, its wholly owned subsidiary Elmet Technologies has received a contract from the U.S. Defense Logistics Agency worth up to $2 billion for the supply of tungsten materials to the U.S. National Defense Stockpile. Boosted by this news, as of press time, Elmet Group's pre-market shares in the U.S. surged over 43% on Monday.

$450 Million Investment Commitment + $2 Billion Defense Contract

Elmet Group stated that the U.S. Department of War's $450 million investment will begin with an initial $200 million disbursement upon transaction completion, followed by additional funding tranches. The company added that over $165 million of this is expected to be allocated to operations in Maine, Michigan, and Ohio, where facilities are responsible for the manufacturing and processing of tungsten, molybdenum, and other advanced materials and components. The investment will also support mining and processing projects for Elmet Group in the U.S., Australia, and Spain. Furthermore, Elmet Group is establishing Elmet Refining & Trading, a new division responsible for coordinating sourcing, processing, and material delivery throughout the company's network.

According to the transaction terms, the U.S. Department of War will acquire redeemable preferred shares of Elmet Group, warrants exercisable for up to 19.9% of Elmet Group's common stock post-closing, and the right to appoint one independent director and one non-voting board observer.

Additionally, Elmet Technologies has won an indefinite-delivery/indefinite-quantity (IDIQ) contract from the U.S. Defense Logistics Agency. The contract is capped at $2 billion and includes a guaranteed funding commitment of $150 million.

The contract covers tungsten ore, tungsten concentrate, and sodium tungstate, to be supplied to the Defense Logistics Agency Strategic Materials division, supporting the rebuilding of the U.S. National Defense Stockpile. The base order period is for five years, lasting until August 30, 2031, with an option to extend for another two years, for a potential maximum term until August 30, 2033.

Elmet Group stated that the company does not intend to deliver materials to the defense stockpile until sufficient additional supply has been secured through mining investment, offtake agreements, and processing capacity expansion. Deliveries are expected to take place in stages as new capacity comes online.

Springer Tungsten Complex Investment Plan! Up to $175 Million

Also on Monday, Elmet Group, along with Blue Moon Metals (BMM.US) and EQ Resources, announced binding terms for an investment package ranging from $150 million to $175 million for the Springer tungsten complex in Nevada, aiming to strengthen the U.S. tungsten supply chain.

Under the arrangement, Elmet Group plans to allocate approximately $150 million for transactions related to Springer. The package also provides for $50 million in tungsten prepayment financing to Blue Moon, a $25 million investment in Blue Moon, and a $75 million investment in the Springer Ammonium Paratungstate (APT) plant joint venture. An additional $25 million has been committed by Elmet Group and EQ Resources as contingency funding to meet the capital requirements for resuming production at the Springer APT plant.

According to Blue Moon's announcement, $150 million of the $450 million U.S. Department of War investment into Elmet Group has already been earmarked for these Springer-related deals. The transactions are subject to due diligence, regulatory and exchange approvals, and final agreement execution.

Buoyed by this news, Blue Moon's shares surged nearly 20% in the U.S. pre-market session on Monday as of press time.

It is reported that upon completion of the planned $75 million investment, Elmet Group is expected to own a 70% stake in the Springer APT plant joint venture, Blue Moon holds 20%, and EQ Resources holds 10%, with Springer operating the facility.

The initial phase targets a production capacity of 4,000 tonnes annually. During this phase, Blue Moon will continue to own and operate 100% of the Springer mine and concentrator, which are currently not in production. Blue Moon aims to restart mining and concentrator operations in Q4 2027, with the goal of restarting the Springer APT plant in the second half of 2028. Blue Moon received regulatory approval in August, allowing the Springer project to proceed with construction.

U.S. Seeks to Strengthen Domestic Tungsten Supply Chain

The U.S. Department of War’s $450 million investment commitment to Elmet Group, the $2 billion contract awarded by the Defense Logistics Agency, and the investments from Elmet Group, Blue Moon, and EQ Resources in the Springer tungsten complex all signal that the U.S. is seeking to bolster its domestic tungsten supply chain.

The supply side is facing multiple structural constraints: China accounts for about 80% of global tungsten mine output, but it is concurrently experiencing declining ore grades (WO₃ grade in Jiangxi’s main mining areas has dropped from 0.40% to below 0.28%) and tightening policies (2025 mining quota to be cut by 6.5%). In February 2025, China will include tungsten and several other critical metals under its export control list, directly reducing available APT and tungsten oxide supply in Western markets.

On the demand side, surges are being driven by both artificial intelligence (AI) and defense. Tungsten hexafluoride (WF₆) is a critical material for TSV processes in HBM and 3D NAND manufacturing, with global demand expected to grow from 9,000 tonnes in 2025 to 15,000 tonnes in 2030, implying net new tungsten demand of 3,700 tonnes. For PCB drilling bits, layer count for AI server PCBs is leaping from the typical 12–16 layers to 24–40 layers, greatly increasing bit consumption, with incremental tungsten demand expected to rise by 789 tonnes from 2025 to 2030.

A key catalyst is the new U.S. defense procurement regulation taking effect on January 1, 2027: The U.S. defense supply chain will prohibit the use of tungsten “covered materials” mined, produced, or processed in “countries of concern” (including China, Russia, North Korea, and Iran), and will require mine-level traceability. This means much of the existing global commercial inventory will be unsuitable for U.S. defense applications, forcing a structural decoupling of Western defense manufacturing from Chinese tungsten supply.

In the face of a supply-demand imbalance, global tungsten prices have experienced a historic surge. The global benchmark price for ammonium paratungstate (APT) has soared from about $300/MTU five years ago to over $3,000/MTU—an increase of approximately tenfold. Current European delivered prices for APT are between $2,900 and $3,100/MTU, while the domestic price in China is about 595,000 RMB/tonne, with the gap now widened to roughly $2,000/MTU.

It is noteworthy that, in addition to the above-mentioned contracts and transactions, recent news about U.S. and Western efforts to strengthen the tungsten supply chain include a landmark cooperation agreement between U.S. mining firm Almonty Industries (ALM.US) and the Rwandan government. According to a binding agreement disclosed on September 14, Rwanda will grant exploration and processing licenses in exchange for a 25% stake in Almonty’s local subsidiary, with Almonty retaining the remaining 75% ownership. This transaction is not only a key step in Almonty’s global expansion strategy, but also marks the first time the West has systematically extended its reach into Africa in building a “de-Chinaized” tungsten supply chain.

Rwanda is the only African country among the world’s top ten tungsten producers, giving it outsized strategic value as the West pursues supply chain diversification. Vancouver-based Trinity Metals currently operates Africa’s largest tungsten mine—the Nyakabingo mine—in Rwanda. Since striking an offtake agreement last year, the company has shipped over 320 tonnes of high-grade concentrate to a Pennsylvania-based processing plant in the U.S., supplying 20% of America’s primary tungsten concentrate consumption.

Almonty CEO Lewis Black stated in an interview that the U.S. government helped facilitate and provided political support for the agreement, but will not provide direct funding. Product shipments will go to customers in the U.S., Europe, Japan, and South Korea.