Since the conflict in the Middle East erupted in late February, the U.S. inventory of advanced weapons and ammunition has been rapidly depleting. The protracted conflict has not only caused a shortage of finished missile stocks but has also transmitted the crisis upstream, leading to a potential supply shortage of tungsten, the "war metal" essential for manufacturing these weapons. Tungsten is extremely hard and highly heat-resistant. Due to its ability to significantly enhance the performance of weapons in penetrating armor or underground bunkers, it is widely used in fighter jets, armor-piercing projectiles, and missile systems. However, replenishing these losses faces practical challenges. Reports indicate there are few tungsten mines globally with true large-scale production capacity, and the mining and processing are extremely difficult. The United States has had no operational commercial tungsten mines since 2015. Currently, the production and refining of tungsten are predominantly led by China, which accounts for over 80% of global tungsten supply. The U.S. primarily relies on recycling and substantial imports—according to U.S. Geological Survey data, the country imports over 6,000 tons of processed tungsten annually. Facing supply pressures, the U.S. is accelerating efforts to rebuild its domestic and allied tungsten supply chains. In February, the White House launched a $12 billion plan to stockpile various critical minerals, including tungsten. Additionally, the White House has provided financial support to domestic mining projects and is attempting to establish mineral cooperation partnerships with U.S. allies worldwide. A U.S. think tank warned last month that the current high-intensity military consumption could lead to a recovery cycle for some key U.S. ammunition stocks lasting several years, which also implies that demand for critical raw materials like tungsten will remain elevated for the long term. A securities research report noted that the recent price decline of tungsten concentrate and APT was driven by the release of earlier inventories, increased scrap tungsten supply, import supplements, and hindered exports. The logic of reduced primary ore supply remains. As smelting cuts production, inventory destocking progresses, and downstream low-inventory restocking begins, tungsten prices are expected to stabilize between June and July. It is suggested to focus on companies with a high proportion of self-owned resources and those positioned in mid-to-high-end deep-processing products. Regarding Hong Kong-listed stocks in the tungsten industry chain: JIAXIN INTL RES (03858): The company's entire revenue is contributed by scheelite concentrate produced at the Bakuta deposit. Following the commencement of commercial production and sales in April 2025, it produced 5,008 tons of scheelite concentrate for the full year and sold 4,879 tons. With capacity ramp-up and operational optimization, the company's cost structure is expected to further improve. Production is projected to increase to around 9,000 tons by 2026. By 2027, with the operation of the second-phase waste rock removal project, the designed annual processing capacity is expected to reach 4.95 million tons per year. At full capacity, annual production is expected to stabilize above 13,000 tons. Recently, JIAXIN INTL RES entered into a non-binding memorandum with PMF to seek mineral resource development opportunities in Kazakhstan.
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