North American Tungsten Bets On Unleaded Future

VANCOUVER —North American Tungsten (NTC-T, NATUF-O) is transforming itself. No longer is it just a tungsten mining company responsible for making about 4% of the world’s tungsten concentrates. It is now, in a joint venture with Tundra Particles, making the world’s only tungsten-based composite as a replacement for lead at a small plant in Hoyt, Minn.

This is the kind of product, in a marketplace full of consumers increasingly wary of the poisonous effects of lead, that could soon end up molded into kids’ toys, fishing weights and, as it turns out, bullets.

The joint venture, which operates the Minnesota plant, recently announced it is in the process of signing its first contract for the sale of its one-of-a-kind tungsten composite. Ammo-maker Fiocchi Ammunition is looking to put the lead-like stuff into its bullets.

“People just haven’t had a good alternative,” CEO of North American Tungsten Stephen Leahy says. “They’ve (other companies) tried steel and bismuth, but they all leach. They’ve never had an inert product like this one. This tungsten composite basically just sits there. It does not leach. It does not break down. And it’s non-toxic.”

But how, and why, does a mining company that operates a tungsten mine in the Yukon decide to transform itself into a company that also makes a novel tungsten composite in the U. S. Midwest?

Going unleaded

In the early 2000s, while North American Tungsten was bringing its Cantung mine in the Yukon back on-stream, China, which produces about 86% of the planet’s tungsten, was clamping down on exports of its own tungsten concentrates. Although that may sound like a good thing — a situation that would open up markets for a new, Canadianbased, tungsten miner — it worried Leahy.

He says he was afraid tungsten processors in North America would shut down as China moved to curb exports of concentrates — leaving North American Tungsten without a Western market. “We could see sitting there (in the Yukon) making a product, a raw material or concentrate, that all of a sudden we had to sell to China,” he says.

Part of the solution the company realized, Leahy says, was to become an integrated tungsten company, both a miner and maker of value-added tungsten products. With that in mind, North American Tungsten put out some feelers to a group in Minnesota that wanted to develop a replacement for lead using tungsten — a company named Tundra Particles.

Up until then, the trouble with using tungsten was that it just didn’t have the malleability of lead. But Tundra had developed a way to get around the problem. By coating tungsten with polymers, Tundra ended up with a malleable product without lead’s toxicity. And to get to that composite, it had also developed a way of using much lower-grade and therefore cheaper concentrates than other processors.

“But then they looked back down the chain and said, ‘Uh-oh. Where are we going to get tungsten from?'” Leahy says.

Although Tundra could make its lead-free product from refined concentrates — bought from China for instance — it ultimately wanted to refine cheaper, low-grade tungsten concentrates for use in its lead-free product (and potentially other ones). Considering sources for lowgrade concentrates, Leahy says, Tundra quickly saw the need to be involved in the complete tungsten supply-chain.

“Because if China decides to close the door at some point (on lowgrade concentrates) — whoops. You don’t have a company anymore.”

Both companies saw the benefits of joining forces. And so in 2006, the two signed a memorandum of understanding to develop the production process in a pilot plant and also agreed to potentially expand operations in a bigger full-scale plant later on. The agreement saw North American Tungsten throwing in about $3 million, while Tundra contributed its facilities for the pilot plant along with its expertise.

More recently, the two companies made the marriage official, announcing the launch of a joint-venture company, Tundra Diversified. Each holds a 43.2% stake in the JV, while a private company, Queenswood Capital, owns the rest.

It has been a learning experience. Leahy says that in the process of developing the product in the pilot plant, “it became apparent that in order to have an entire concentrate through APT stage (Ammonium Paratungstate, a refined tungsten product) we would need to build a much bigger plant.”

But since neither company had that kind of money, the partners arrived at a compromise. The joint venture is going ahead with production of the lead-like composite at the small plant in Minnesota, but it will do so without refining North American Tungsten’s own low-grade concentrate.

“The goal is to get into a business that gives us a history. We can finance from there and then build a bigger plant,” Leahy says.

The advantage of starting small is that it gets the partners into production. “It gives us a leg up in the market,” Leahy says.

Leahy sees the compromise as an interim solution. Within five years, he wants to ramp up production at a bigger facility to more than 10 times the 5,000 metric tonne units (MTUs) it plans to push through at Tundra Diversified’s current plant. Then, the joint venture would refine North American Tungsten’s low-grade concentrate.

A facility of that size, he says, would also require more low-grade concentrate than it currently produces at its operating Cantung mine.

The source of the additional concentrate, Leahy hopes, will be North American Tungsten’s next potential mine in the Yukon, the Mactung project. Currently undergoing a feasibility study, North American Tungsten has pegged Mactung’s indicated resource at 33 million tonnes grading 0.88% WO₃, making it one the world’s largest, undeveloped, high-grade tungsten deposits, the company says.

“Mactung would come on-stream with more than double our current mine’s production,” he says.

But more to the point, North American Tungsten’s adventure into the realm of making novel tungsten products could give its future low-grade concentrate a new outlet — and help ensure the company’s survival against a Chinese tungsten juggernaut.