By Drew Hasselback -- Tungsten’s useful, China controls it, the NWT looks bad You’ve probably heard of tungsten, but unless you snuggle into bed each night with your copy of the Minerals and Metallurgical Processing Journal, you probably can’t come up with a quick list of the metal’s applications. Right now, though, you don’t have to be a mining geek to be interested in tungsten, particularly if you have an interest in Canada’s North.

One of the most advanced mineral projects up here is North American Tungsten’s Mactung project, which straddles the border between the Yukon and the NWT. Construction of a $356.5-million tungsten mine could begin there in 2010. This project is one of the few in the world that offers manufacturers an alternative to China’s dominance of the tungsten market.

Tungsten is tough stuff. It’s used to reinforce steel, particularly alloys that might be exposed to extremely high temperatures and pressures. This makes it ideal for a range of applications from light bulb filaments to drill bits for oil rigs.

You can find tungsten in a long list of things we use in our every day lives: the circuit board in your iPod, the inserts that defrost your icy car windows, the device that lets your cell phone vibrate instead of ring, even the actual ball in a ball point pen. So tungsten is pretty useful, and manufacturers of all stripes get nervous when they see so much of the world’s supply coming from China.

The usual storyline about China’s affect on mining is the emerging superpower’s seemingly insatiable demand for basic minerals. An early signal of the recession’s end was a boost in Chinese demand for copper. Exporters of iron, nickel and copper clearly benefit from Chinese demand.

Tungsten is one area where China’s supply situation is dramatically different. According to the U.S. Geological Survey, China is home to roughly 75 per cent of global production and about two-thirds of the world’s known resource base. China limits tungsten exports, and that’s a scary prospect for consumers in other parts of the world. Where do they go if China turns off the tap? Behold, the business case for the Mactung mine. Building a non-Chinese source of supply will be met with sighs of relief by Western-world steelmakers and light bulb manufacturers who fear what might happen if China hordes supply.

According to a feasibility study released last April, North American Tungsten believes Mactung should be able to pay for itself within the first three years of operation. It would produce some 749,000 metric tonnes of tungsten concentrate during the first five years of operation. The total lifespan of the mine is currently pegged at 11 years.
The company is relying on Mactung to pick up where its previous flagship operation, the Cantung mine, left off. Cantung is located just south of Mactung, but the older mine is a high-cost operation that will be placed on “care and maintenance” effective this October due to increased product inventory and a recent decline in tungsten prices amid the global economic slowdown. Yet it should be mentioned that some recent exploration work has lengthened Cantung’s potential life span, and North American says it wants to relaunch production at Cantung when markets improve.

Despite its importance to the global tungsten market, the Mactung operation caught my attention not as an interesting new source of metal, but as an example of the bad reputation the NWT has acquired when it comes to permitting. Although the deposit straddles the border, for regulatory reasons the company is locating most of the mine’s operations in the Yukon.

Officials in the Yukon like to point out that while it took 69 days to permit the upgrading of a cross-border mining road on their side of the line, it took 900 days for the NWT portion. The disparity can partly be explained by the ongoing expansion of Nahanni National Park (the project is in the Nahanni watershed), but perception becomes reality: Conventional wisdom for southern investors is that the NWT is a slow place to work.

Previous ownership had contemplated building some of Mactung’s infrastructure on the NWT side. North American, which acquired the project in 1997, ultimately decided it would locate its mill and tailings pond in the Yukon. At least part of this decision was due to what CEO Stephen Leahy once described to Northern News Services as a “convoluted” regulatory process in the NWT.

In terms of jobs, it won’t matter whether the mill’s postal code begins with an NWT “X” or a Yukon “Y”. People from both sides of the border will work at the mine. But the larger messages are clear: Red tape affects business decisions and investment capital follows the path of least resistance. The NWT needs to get ahead on the regulation front. Tungsten might be known for its durability. Unfortunately, a bad reputation can prove just as tough to crack.