On Thu, 15 Mar 2012 16:41:36 -0500, Richard
wrote:
Forbes thinks you have your head buried somewhere, Ed...
http://www.forbes.com/sites/ciocentr...should-care/2/
Page 2
_Prior to 2001, Tungsten miners looked for new sources even as they
harvested existing ore in order to guarantee a continuous supply. But in
the early 2000s, China flooded the market with inexpensive tungsten.
That, coupled with the recession in 2008-2009, drove the price of
tungsten down to the point where many mines went out of business and
others found it too expensive to continue exploration. Consequently,
from 2009-2011 the search for new sources of tungsten dried up._
With China recently deciding to restrict exports and buy up as much
tungsten as it can, demand has exploded and the search is on again.
Unfortunately, the timetable – from exploration to building a new mine
or reopening an existing one to the actual production of tungsten
concentrate – is typically a two-to-three year process for those mines
currently extracting tungsten for export. In the case of companies that
are drilling for (and find) new supplies of tungsten “from scratch,” the
cycle to production is at least three to five years. Bottom line: there
is no new significant supply of tungsten expected on the market before 2013.
That may explain Berkshire’s move, and why, when the price of most
commodities plunged during the second half of 2011 – some by as much as
60 percent – tungsten prices remained stable at $430-$445 per MTU
(metric ton unit) – nearly double what they were in 2009. Some analysts
predict the price could reach even higher levels in 2012, which is not
unrealistic when you consider that some producers state that demand is
so high they could ship tungsten at a rate of one container per day –
versus the current rate of one per week – if they had the capacity.
Given the short supply of available tungsten on the world market,
industries that are depending on it more and more (such as technology)
appear to have limited options. In fact, if you view a Warren Buffet
type of move – where a company acquires a tungsten operation/mine for
its own private use –as unrealistic for most businesses, then there’s
really only one other viable possibility: working with and encouraging
those companies (outside of China) that are currently supplying tungsten
to increase supply and meet demand.
_The risk of not doing so could result in China choosing to repeat its
earlier policy of flooding the market, which would not only drive some
suppliers out of business – but potentially create a virtual, worldwide
monopoly with prices and supply dictated by China._ Recent rises in the
price of oil – again – and the effect it has had on the worldwide
economy should tell us that’s not the way to go.
There aqre something like 500 mineable sites in the US, Richard. And
there are a number of mines that are shut down, ready to go if the
economics swing in their favor.
I'd have to go searching for the numbers and I'm not that interested,
frankly.
Make of this what you want, but I worked alongside of Forbes
reporters, years ago, on steel industry press jaunts. Most of what
they knew about the steel industry they learned from me, and they
still got a lot of it wrong. d8-) I don't have very high regard for
their industrial reporting. They're mostly good writers, though.
--
Ed Huntress