Tungsten prices have gone vertical. A fivefold increase in a single year isn’t a market fluctuation: it’s a systemic failure of the status quo.
While the world was distracted by the lithium-ion arms race and the looming copper crunch, the fundamental building block of the industrial and defense complex quietly broke the bank. If you’re looking for the next bottleneck in global manufacturing, you found it.
Tungsten is the hardest metal on the planet after diamond. It has the highest melting point of any element. You don’t just “want” it; you need it for everything from the drill bits that find our oil to the kinetic energy penetrators that define modern warfare.
But there’s a problem. A big one. China controls over 80% of the global supply. And as 2026 unfolds, the U.S. has finally decided that being at the mercy of a geopolitical rival for critical defense minerals is a recipe for disaster.
The result? A massive, $240 million bet on Kazakhstan.
The math of the fivefold surge
Let’s be blunt: the tungsten market is broken. BMO recently released a forecast that confirms what industry insiders have been whispering for months. We are staring down a structural deficit that isn’t going away with a few new small-scale mines.
Prices have surged 500%. That’s not a typo. That’s a crisis.
Global inventories are at historic lows. Underinvestment in Western mining projects over the last two decades has left the U.S. and Europe completely exposed. While we were focused on “just-in-time” supply chains, China was building a “just-in-case” monopoly.
The demand side is even more aggressive. We’re looking at an average annual growth rate of 8%. By the mid-2030s, this will be a $10 billion industry. This isn’t just about old-school manufacturing. We’re talking about high-end electronics, aerospace, and the “hard-facing” materials required for the very machinery that builds the renewable energy infrastructure of the future.
The $240 Million Drozhilov gamble
Washington is no longer just “expressing concern.” They are writing checks.
The U.S. Export-Import (EXIM) Bank has signaled its intent to fund up to $240 million for the Drozhilov project in Kazakhstan, operated by QazMoly. This isn’t a standard loan. It’s a strategic lifeline with one very specific, very aggressive condition: 100% of the tungsten offtake must go to the United States.
Not a majority. Not “priority access.” 100%.
This move signals a radical shift in U.S. mineral policy. We are no longer content with “diversifying” supply chains. We are now effectively nationalizing the output of foreign mines through financing agreements. It’s a “buy everything” strategy born out of necessity.
The Drozhilov project isn’t the only Kazakh asset in play. The U.S. International Development Finance Corporation (DFC) is also looking at nearly $700 million in financing for the Severniy Katpar mine. Kazakhstan holds over 10% of global tungsten reserves, and the U.S. is moving to lock them down before anyone else can get to the table.
Why Kazakhstan? Why now?
For years, Central Asia was seen as a difficult place to do business. But in 2026, “difficult” is a luxury we can afford; “empty” is not.
Kazakhstan is sitting on approximately 1.3 million tons of tungsten reserves. Between the Upper Kairakty and Northern Katpar deposits, they have the scale to actually move the needle on global supply.
But it’s not just about the geology. It’s about the geopolitics. U.S. Special Envoy Sergio Gor recently noted that Kazakhstan is becoming a “reliable partner.” In diplomatic speak, that means they are willing to play ball with Washington while others are looking toward Beijing or Moscow.
The memorandum of understanding on critical minerals signed in late 2025 wasn’t just another piece of paper. It was the blueprint for what we’re seeing today: a total pivot of the Central Asian mining sector toward Western markets.
The defense dilemma: Armor and Carbide
If you want to understand why the Pentagon is sweating over tungsten, look at a tank. Or a missile. Or a machine gun.
Tungsten carbide is the backbone of modern defense. It’s used in armor-piercing rounds because of its incredible density. It’s used in the hard-facing of vehicle armor. It’s used in the precision tools required to manufacture advanced jet engines.
Without tungsten, the U.S. defense industrial base grinds to a halt.
The current shortage is particularly “nasty” because there are no easy substitutes. You can’t just swap in aluminum or steel when you need the heat resistance and hardness of tungsten. It’s a binary reality: you either have it, or you don’t.
Ironically, while we’ve seen plenty of M&A activity in the gold sector and copper space, the critical minerals sector has been slower to consolidate. That’s changing. We’re seeing smaller players like Core Critical Metals acquiring stakes in tungsten-heavy properties like Lucky Mike. The “big boys” are starting to realize that if they don’t own the supply, they don’t own the future.
Breaking the China stranglehold
Let’s talk about the elephant in the room: China.
For decades, China has used its dominance in tungsten to dictate terms. They didn’t just mine it; they processed it. They built the chemical plants and the carbide manufacturing hubs. They controlled the entire value chain.
The U.S. strategy in Kazakhstan is an attempt to replicate that entire chain outside of Chinese influence. The Kazakh projects aren’t just about digging rocks out of the ground. They are planning full-scale chemical processing and even tungsten carbide manufacturing facilities on-site.
This is the “de-risking” that politicians love to talk about, but with actual capital behind it.
The 2026 outlook: A grim reality for buyers
If you’re a consumer of tungsten: whether you’re making drill bits for mining or components for the aerospace industry: the next 24 months are going to be brutal.
The Drozhilov project and Severniy Katpar are massive, but they won’t reach full capacity overnight. Mining is a slow game. Geology doesn’t care about your quarterly earnings or your defense procurement timelines.
The BMO forecast of continued deficits is likely conservative. As more industries realize the extent of the supply crunch, we expect to see even more panic-buying.
Here’s the kicker: The U.S. move to lock up 100% of the Drozhilov offtake actually makes the market tighter for everyone else. By securing its own supply, the U.S. is effectively removing a massive chunk of future production from the global “free” market.
If you aren’t the U.S. government, where do you get your tungsten? That’s the question haunting European and Japanese manufacturers right now.
Is this enough?
The $240 million for QazMoly is a start, but it’s a drop in the bucket compared to what’s actually needed.
We are seeing a total re-ordering of global mineral priorities. The days of cheap, abundant tungsten are over. We are entering an era of “mineral nationalism,” where financing comes with strings attached and offtake agreements are treated like matters of national security.
Kazakhstan is the current frontline of this battle. It’s a high-stakes game of geopolitical chess where the pieces are made of tungsten and the stakes are the survival of the Western industrial base.
The fivefold price surge was the warning shot. The $240 million EXIM loan is the response. But as the 2026 deficit looms, it’s clear that the tungsten crunch is just beginning.
There’s not enough to go around. Welcome to the new reality.
For more in-depth analysis on critical mineral supply chains and the 2026 market outlook, explore our latest reports on copper supply risks and the impact of ESG on capital access.
