The Cantung Mine in the Northwest Territories, once one of the largest tungsten producers in North America, is currently owned by Darnley Bay Resources Limited, a Canadian mining company. The mine has had a complex ownership history, but as of recent years, Darnley Bay Resources has been working on restarting and exploring the potential for further tungsten production from the site.

Previously, the mine was owned and operated by North American Tungsten Corporation Ltd. until the company went into bankruptcy in 2015. Afterward, various stakeholders and companies have explored opportunities for reviving the operation, with Darnley Bay Resources holding the current stake.

The mine itself has faced several challenges over the years, including fluctuating tungsten prices, environmental concerns, and logistical difficulties due to its remote location. However, the Cantung Mine still holds significant tungsten deposits, and interest in its development remains due to the ongoing global demand for tungsten.

Platohagel: Value of Tungsten in Canada and Mexico

Socrates: Tungsten is a critical metal used in various applications, such as in manufacturing tools, electronics, aerospace, and defense industries. However, the value of tungsten in Canada and Mexico depends on a few factors, such as production levels, supply-demand dynamics, and global market conditions.

In both countries, tungsten is primarily imported rather than produced in large quantities. Canada does have some tungsten mining operations, notably in British Columbia, with the world’s largest tungsten mine, the Cantung Mine, which was closed in 2015 but still has significant deposits. Mexico, on the other hand, has some tungsten reserves, but its production is limited compared to other countries like China, which dominates the global supply.

In terms of pricing, tungsten is traded on global markets, with the price often quoted in terms of tungsten metal content. As of recent years, the price of tungsten has fluctuated between $250 to $350 per metric ton unit (MTU) of tungsten content, but it’s subject to market volatility. Both Canadian and Mexican markets would likely reflect this global pricing, though transportation and mining costs can impact the final price.

Platohagel: Can Canada and Mexico make a profit of selling Tungsten to the American market with tariff’s applied?

Socrates: The potential for Canada and Mexico to make a profit from selling tungsten to the U.S. market while dealing with tariffs depends on several factors:

1. Tariff Impact:

• The U.S. imposes tariffs on a variety of imports, which can affect the pricing and profitability of tungsten imports from Canada and Mexico. The exact tariff rate on tungsten products will depend on the form of tungsten being exported (e.g., raw tungsten ore, tungsten carbide, or tungsten-containing products) and the specific tariff schedules in place.

• Canada and Mexico are part of the United States-Mexico-Canada Agreement (USMCA) (formerly NAFTA), which generally eliminates tariffs on most products traded between these countries. This means that, in theory, tungsten exported from Canada and Mexico to the U.S. should not face tariffs, as long as the trade complies with USMCA rules of origin. However, products that don’t meet these rules might still face duties.

2. Cost of Production vs. U.S. Market Price:

• Production Costs in Canada and Mexico play a crucial role in profitability. If the cost of extracting and processing tungsten is relatively low in these countries, they might still be able to compete with other tungsten-producing nations, even with some tariffs or costs involved in transportation.

• Global Tungsten Prices are also a factor. If the market price of tungsten rises or stays high due to limited supply (e.g., due to China’s dominance in production), then the profitability of tungsten exports might increase, despite tariffs or logistics costs.

3. Global Competition:

• The U.S. market for tungsten is highly influenced by global supply chains. China dominates tungsten production and has a significant impact on global pricing. If Canadian and Mexican producers can offer competitive prices, they might still be able to profit by offering tungsten with unique qualities, more reliable delivery, or lower transportation costs compared to China.

4. Logistical Considerations:

• Proximity to the U.S. is an advantage for both Canada and Mexico, as transport costs to the U.S. are relatively low compared to other global suppliers. This can offset some of the costs involved in tariff payments or other fees, making exports more viable.

5. Market Demand:

• Tungsten Demand in the U.S. also plays a key role. If the U.S. market requires large quantities of tungsten for manufacturing, defense, or other industries, then there could be steady demand for tungsten from Canada and Mexico despite potential tariffs.

Conclusion:

Canada and Mexico likely have an advantage in selling tungsten to the U.S. due to the tariff-free trade provisions under the USMCA, provided they meet the agreement’s rules of origin. As long as their production costs are competitive and the demand for tungsten in the U.S. remains strong, they can still profit from selling to the American market even with minor logistical and tariff considerations.

If the tariffs were to increase, it would certainly reduce profit margins, but proximity and trade agreements should still give Canada and Mexico a reasonable chance at maintaining profitability.