US bets $450 million on easing China tungsten reliance

Washington: The Pentagon has announced a $450 million investment in an American metals company to expand tungsten production and reduce dependence on Chinese supplies of a material used in missiles, fighter aircraft and submarines.

The investment in The Elmet Group will support domestic processing and manufacturing. Announcing the move on September 14, the department said it would help secure supplies for the US defence industry.

China accounts for an estimated 85 per cent of global tungsten supply, according to the Pentagon. The department said expanding refining and processing capacity in the United States and aligned countries would reduce exposure to supply chains dominated by potential adversaries.

“This investment reflects the Department's commitment to rebuilding critical industrial capacity in the United States,” said Mike Cadenazzi, assistant secretary for industrial base policy.

“Expanding domestic tungsten processing will strengthen supply chain resilience, support high-quality manufacturing jobs, and reinforce the production base behind essential defense systems.”

The department said Elmet supports more than 100 military programmes. These include the F-35 fighter, Patriot PAC-3 air defence system, Trident D5 missile and Virginia- and Columbia-class submarines.

It described the company as the only US-owned, fully integrated producer of tungsten and molybdenum materials and components.

A central part of the investment concerns ammonium paratungstate, a compound used in tungsten processing. The Pentagon said the funding would establish the only independent facility producing it in North America. It identified this processing stage as a major vulnerability in the US industrial base.

“The Economic Defense Unit was created to identify critical industrial chokepoints before adversaries can exploit them and before they become battlefield risk,” said George K. Kollitides II, the unit’s director.

He said the investment would protect a domestic processing capability needed to sustain military production.

The Pentagon expects the project to create jobs in Coldwater, Michigan, and Lewiston, Maine. It also expects to preserve manufacturing jobs in Euclid, Ohio, and increase demand for mining jobs in Nevada.

Separately, it estimated that the investment would support about 1,200 downstream jobs across manufacturing, engineering and logistics networks serving major defence suppliers. These are projected benefits, rather than jobs already created.

Elmet’s own announcement confirmed the $450 million commitment. The company said funding would begin with an initial $200 million drawdown at closing, followed by further drawdowns.

Under the agreement, the department will receive preferred equity and warrants representing up to 19.9 per cent of Elmet’s common stock on a post-transaction basis. It will also have the right to appoint an independent director and a non-voting board observer.

The company said it anticipated investing more than $165 million in its manufacturing operations in Maine, Michigan and Ohio. The planned upgrades would expand capacity and modernise facilities supplying defence and industrial customers.

Tungsten is valued for its hardness, density and resistance to heat and wear. Those properties make it useful in military equipment as well as demanding industrial applications. The Pentagon identifies uses across missiles, munitions, aerospace, propulsion, naval systems and electronics.

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