NATC opposed to DLA tungsten release proposal
2005-08-11 16:01:06 【Print】
BEIJING (Asian Metal) 11 Aug 05 – U.S. DLA (Defense Logistic Agency) proposed to increase tungsten concentrate release from 5 million to 20 million pounds for next fiscal year. The biggest western tungsten suppliers, North American Tungsten Corporation (NATC) and Almonty, are against the proposal while major users favor it. On this issue, Mr. Stephen Leahy, the NATC President, granted an interview to Asian Metal.
NATC believes the release will be detrimental to the market in the long run. “The price, in the short-run, will drop and release partial supply pressure off the market, but in the long run, the effect will be inimical to orderly and sustainable growth of the market,” said Mr. Leahy. “20 million pounds of tungsten concentrate is equivalent to 1/3 of DLA stockpile, so it cannot support the market for long, at most three years in this case. The market will likely be plunged into unending crisis, which will not be beneficial to all concerned, and DLA will not able to solve the attendant problems not created by it.”
“However, other big companies that include Osram, Kennametal support the proposal, for they would be able to buy tungsten at cheaper prices. When DLA sells tungsten to the market, who are those that have the financial muscle to bid? The answer is, obviously not those medium and small-sized companies, but those large companies with enormous financial resources. And will they sell the material to the smaller companies at affordable price? This, I have my doubt as there is no mechanism put in place to ensure that others will be able to participate fairly and equitably.”
“I would say 5 million to 8 million is more reasonable for DLA to release. This quantity will support the market to ease pressure off it in the short run and help stimulate it in the long run. But with a 20 million pound worth release to the market, NATC will keep opposing the proposal.”
Commenting on the future market, NATC holds optimistic attitude to the market, and it thinks the price will continue to rise in the long-run. “Look at molybdenum, the price increased many times, and the market is still booming. If we give the market some time to adjust itself, equilibrium position between demand and supply will find its level sooner than expected, not through the influence from a government agency.”
According to Mr. Leahy, the DLA proposal is already influencing the western market. Consumers are holding back from purchasing and waiting for cheaper material. “When they find the price would not go the way they expected, or the proposal sail through, that will create chaos in the market.”
NATC will soon begin to process tungsten ore from its own mine, CanTung, by the end of the month, and the first shipment will be in September. With around 770,000 tons ore reserve, NATC will supply about 4,000 tons tungsten concentrate per year before the other mine, MacTung, puts in production.
