Leo Wainwright, a heavy wire specialist, makes tungsten wire Nov. 1, 2022, at Elmet Technologies in Lewiston. Daryn Slover/Sun Journal

LEWISTON — Elmet Technologies has struck a strategic partnership in what is known as an offtake agreement with Australian mining company EQ Resources Ltd. to secure a supply of tungsten at a time when the world’s largest supplier of the metal — China — is on the verge of limiting or cutting off exports of the metal.

An offtake agreement is a contract between a buyer and a producer to sell and purchase all or most of a producer’s future output.

Under the offtake agreement, Elmet will give EQR a $2 million advance payment and agree to purchase $30 million worth of tungsten from EQR over the next five years. In exchange, EQR will give Elmet an equivalent sum of shares of EQR. The agreement includes an option to extend the deal beyond five years.

In a news release Sept. 2, EQR CEO Kevin MacNeil said: “Through Elmet we found a partner that shares ambitions with regards to the development of sustainable and resilient supply chains for critical raw materials. EQ Resources’ rapidly growing tungsten mines in Australia and Spain will provide Elmet with the improved industrial resiliency to support their mission critical U.S. defense customers.”

SCRAMBLE FOR CRITICAL METALS WORLDWIDE

China, by far, has the world’s largest reserves of tungsten, a metal that has military, aerospace, medical and many other applications. Australia has the second largest reserves of tungsten and EQ Resources is the largest western supplier of tungsten, according to MacNeil.

Tungsten is the strongest metal in the world with the highest tensile strength. It’s very dense and has the highest melting point of any metal.

Tungsten wire is heat treated at Elmet Technologies in Lewiston. Daryn Slover/Sun Journal/file

Elmet Technologies is the largest U.S.-owned and based producer of tungsten and molybdenum materials and products after its acquisition last year of H.C. Starck Solutions Americas and is also one of only a few manufacturers in the country with the experience and machinery to take tungsten and molybdenum powder, which is semirefined, and process it into wire, plate, sheet and foil, cubes and spheres. It does so by pressure rolling it and heat treating it. The company is also making alloys from the metals and the applications grow each year.

The U.S. REEShore Act already prohibits the use of Chinese tungsten in military equipment starting from 2026, and Elmet already has military contracts and is among global producers looking for alternate sources of tungsten and other critical metals.

EQR’s MacNeil said the company has working tungsten mines in Queensland in the country’s north and in Spain, which has the sixth  largest reserves of the metal. Other large reserves are in Russia, Vietnam, North Korea, Bolivia, Austria and Canada.

“Raw material security has become a top priority, geopolitically and in many boardrooms around the world and investing in sustainable mining in Australia and Spain provides a unique market solution,” MacNeil added.

Elmet CEO Peter Anania also emphasized supply chain resiliency.

“With an increasing focus on critical materials used for defense applications, securing long-term access to high quality tungsten concentrate was a strategic imperative for our business,” he said. “This collaboration with the fastest growing Western tungsten mining group, having active mines in both Australia and Spain, will ensure our ability to support the growing demand for our materials, particularly in the U.S. and Western countries.”

The U.S. Geologic Survey reported there was no commercial production of tungsten in the United States between 2015 and 2019. Mostly tungsten reserves are in western states but smaller deposits can be found in several eastern states, including Maine.

Tungsten most commonly occurs in the minerals scheelite, ferberite and hubnerite.