Mining CEO explains tungsten's role in EVs

Mining CEO explains tungsten’s role in EVs

The CEO of mining company Almonty Industries gives us the latest demand expectations for the rare metal in relation to EVs.

EV manufacturers depend on a variety of resources to maximize the range, performance and charging capabilities of an all-electric powertrain. Among these is tungsten, a rare metal that, even in tiny doses, is essential to meet the expectations of today’s electric vehicle.

“In relation to EVs, you use [tungsten] in the looms. Tungsten gas is pumped into every semiconductor and you have about 2,000 semiconductors in each EV,” says Lewis Black, president and CEO of Almonty Industries, a global mining company focused on tungsten mining. “In Korea, which is now at the forefront of batteries for the latest generation of batteries, you use it on the anodes and the cathodes. You use a nano-size fraction of tungsten so you can charge the battery much quicker and it doesn’t combust, which, of course, is one of those things that obviously many EV owners are concerned about. So, it has an increasing role within EVs, as well as many other technology centers.

On this episode of The Amped EV Podcast, Black explains why EV manufacturers depend on tungsten and other resources, where manufacturers source their tungsten, and where he sees the demand curve heading for this metal.

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Here’s a transcript of the show:

David Sickels: Hello and welcome back to the Amped EV podcast. My name is David and I am the editor for The Buzz.

Nadine Battah: And my name is Nadine and I’m the editor of TechShop.

David Sickels: Okay. So, truly, we have a really cool guest on today. His name is Lewis Black. He is the president and CEO of Almonty Industries. This is a company that produces tungsten. Tungsten very important for EVs, for the production of EVs.

Nadine Battah: For sure.

David Sickels: The batteries, the semiconductors… It has a very important role. And I wanted to talk with Lewis about producing tungsten, about supplying tungsten and how important this metal is for these EV manufacturers. Do you want to get right into it?

Nadine Battah: I’m ready. Let’s do it.

David Sickels: Lewis Black, thank you today for joining us. I really appreciate your time here. So I just want to kind of get right into it. Can you explain the role that tungsten plays when it comes to EVs, and then why is this such an essential resource for electric vehicles?

Lewis Black: Well, tungsten is used across pretty much every sector in every economy, whether it be defense, medical, aerospace, or automotive. But in relation to EVs, you use it in the looms for obviously it’s connected through all the looms of the vehicle. Tungsten gas is pumped into every semiconductor and you have about 2000 semiconductors in each EV. And in Korea, which is now at the forefront of batteries for the latest generation of batteries, you use it on the anodes and the cathodes. You use a nano-size fraction of tungsten so you can charge the battery much quicker and it doesn’t combust, which of course is one of those things that obviously many EV owners are concerned about. So it has an increasing role within EVs as well as many other technology centers.

Nadine Battah: That’s very interesting. Where does tungsten primarily come from, and do you see any issues obtaining needed amounts in the near future as EV demands ramp up in the coming years?

Lewis Black: Well, 90% of tungsten is produced between China and Russia. So you can see that there’s a sort of supply chain diversity issue. And it’s a very long and lengthy process to address that concern, to be perfectly frank. And, so, I think in terms of go-forward supply, the industry’s always been in balance and equilibrium. So tungsten demand grows, normally following inflation, before we had this new super inflation by about 3% a year globally. In Korea it’s about 6%, but generally, it’s 3%. And so supply and demand has always remained in pretty much good balance. But what we’ve seen, and it’s been reflected in the price of tungsten, is that supply balance is now completely out of whack. You can’t get enough tungsten to produce the items that you need to be able to reduce this increasing demand for EVs. And the countries that can provide it are countries that you are trying to diversify away from. So it’s really a rock and hard place right now in our sector.

Nadine Battah: For sure. Are there new batteries being researched to your knowledge that might shift the demand for EV resources like tungsten, cobalt or lithium?

Lewis Black: Lithium? Probably not, because lithium is an extremely efficient metal in doing what it does. Cobalt, I think the consensus is that if there was an opportunity to get away from it, they would. Firstly it’s very expensive, but more than that, it’s a carcinogen. so you can’t really put these things in landfills. And the process of extracting cobalt is a particularly environmentally dirty business. Plus, of course, I think 80% or 85% of the world’s cobalt comes from DRC. And let’s be perfectly honest, it’s not the greatest thing to support in terms of how they mine. I think we’re all very aware of the stories we hear. But again, there’s nothing we can do because we have no other option.

Tungsten, on the other hand, has never been a driving metal in the sense that the bulk of the battery is not going to be tungsten. Tungsten is used across all sectors, is used a little bit of it, and that’s essentially essential for that bit. So you’ll use it on the anodes and cathodes to enable you to essentially charge it much quicker and to reduce that combustibility. You can put more nickel in the battery with tungsten and reduce the amount of cobalt.

David Sickels: Where is Almonty Industries getting the majority of or mining the majority of its metals?

Lewis Black: We operate in Spain and Portugal, and we are now in the process of reopening the world’s largest tungsten mine in South Korea. Coincidentally, as I said, is the largest consumer of tungsten per capita in the world.

David Sickels: Wow. Wow. Very nice. Very nice. So obviously you were talking about different concerns with some of these metals, one of those being environmental concerns with any sort of mining. EV owners, a lot of times they are very environmentally conscious. So what is your company doing to address these concerns?

Lewis Black: Well, I think it’s not something we’ve just started doing. It’s been a requirement from our customers and our customers are vertical. They go all the way through to the finished product. We’ve been working on, what they call it now ESG, but prior to that was supply chain transparency. And we operate only in democracies. And democracies, they’ve always taken a very proactive view on how the environment should be respected anyway. I think many of the owners, yes, are more sensitive to environmental outlook because they’re also aware that many of the products within that EV are from territories that perhaps have a much less focus on environmental compliance.

I like to operate in democracies, not because the regulatory misery that it brings or the fact that it’s not for the faint-hearted because I like to be able to firstly be transparent, but also I want to sleep at night. I don’t want to wake up one day and find the president’s son has decided he wants to be in the tungsten business and find a new name over the gate. All of my team are very happy that we are less than 20 minutes drive from a decent restaurant in every one of our sites. As engineers, that’s how we like to measure our success.

But it is very, very difficult to operate in a democracy. Not so much once you’re in operation, but to actually build in a democracy now. We are in that strange dichotomy where we know what we want and we know what we have to do, we just don’t know how to do it because mines have this image and reputation of being these dreadful, dark, Victorian, life-threatening, baby-killing institutions. And that’s not a modern mine at all. Now, modern mine now has virtually no impact. Ultimately, its contribution to the environment outweighs even its negativity now because of the programs that are in place. It integrates with communities. It’s essentially a much more regulated and controlled and obviously longevity in terms of having to get started, but it’s image now does not do it justice of what modern mines are. And I think that would be important to bring people into the fray and say, “Look, it’s not what it used to be. Those days are long behind us.”

David Sickels: For sure. For sure. You mentioned supply chain transparencies. How is your company helping to show that off?

Lewis Black: Well, we’re in a democracy, so everything is accountable. So we have obviously very stringent rules on employment. The EU has rules on diverse employment practices, environmental compliance, and community integration. So these are already regulations that exist within the territories you work in. So we are very easy to audit. And our customers who audit every year, they come down, they have some coffee, they tick all the boxes because we don’t have under twelves working kind of thing. It’s transparent in that sense, and our customers are very appreciative of that because unfortunately they still have to work in some jurisdictions where transparency is much more difficult.

David Sickels: Sure, sure. And so how is your company working with maybe manufacturers of EV batteries or other electronics that use tungsten to make sure that they are able to responsibly and sustainably source these kinds of materials?

Lewis Black: Well, I mean, we can supply what we supply. But there’s a harsh reality I think we all have to acknowledge. We don’t have the choice at this moment to shop anywhere we want. We only have a very small amount of shops that we can go to procure what we require. In the eighties when mining was very prevalent in the West, China arrived with very cheap material. Which drove, in tungsten’s terms, we had over a hundred tungsten mines around the world in the West at the beginning of the eighties, end of the seventies and by the early nineties we had three. So there was a decimation.

But ultimately we don’t have the luxury of saying that everything we procure has met the standards we would like to see adhered to because we don’t have that choice. If we don’t, at this moment, not look the other way, but try and work with what we have in the best way that we can, we are not going to be able to remain competitive or lose market share to those who are less fussy. Every one of our customers fully appreciates what has to be done, but they’re also caught between a rock and a hard place.

If they make a huge noise about diversification and about transparency and about the need to really move to a far more open future, they risk the wrath of their primary source who may decide, well, if you don’t like us, we’re not going to sell to you. So I think ultimately governments also face the same problem. If you think, for instance, 90% of the world’s tungsten is produced from China and Russia, and currently, 22% of tungsten being produced is consumed in defense, you can see there’s problems. If you’re in the EV business and 74% of the world’s batteries are still produced in China, do you really think they’re going to give up that market share because it’s the right thing to do? It’s a business. We have no idea how they’re going to defend that market share. No one does. And so companies have a problem if they make too much scandal about it, they run the risk of losing access. And that of course will be catastrophic to their business and to their shareholders and to their consumers.

David Sickels: That makes sense.

Nadine Battah: Those are all very interesting points, Lewis. Now, are you pursuing any other growth opportunities where you can apply your tungsten expertise to create a better supply chain environment for EVs?

Lewis Black: You mean are we trying to amp ourselves up?

Nadine Battah: Yeah. Yes.

Lewis Black: Okay. Well, I think that tungsten in the fifties and sixties was more valuable than gold. And so a lot of the western mines were played out, and those that survived are now in areas that you could never mine again. So there’s one site in northern California, which is now in a protected area. And so environmentally, a lot of these mines, like many mines, all mines, weren’t exactly… They were conceived in the late 19th century, early 20th century and so I can’t see any of these really reopening. And the other sort of large mines you see in China and in Russia. So we will continue to refine and expand our existing projects, but to be honest, we could sell three times what we’ve produced right now. So we have to do things in a measured and correct way. And fortunately, the South Korean project presents an opportunity, it has a hundred-plus years of reserves, and if the market continues to demand further diversity, which I believe it will, we will keep expanding that mine to try and cover our customers’ requirements.

David Sickels: Wow. Wow. Are EV manufacturers or battery manufacturers, is that one of your primary customers right now? I’m just curious.

Lewis Black: They are certainly the area with increasing demand. So other sectors we see a fairly consistent predictable demand profile. But in certain technologies, semiconductors and batteries are two of the big growth areas within our technology sector.

David Sickels: Got it.

Lewis Black: So yes, we are seeing increasing demand. I think my biggest concern, if you said to me what’s my biggest concern with EVs, my biggest concern with EVs is the government continues to get involved and start mandating them. What we’ve seen in Europe, because Europe generally, not in many ways, but in some consumer angles, you can predict what’s going to happen in the US by seeing in Europe. And in Europe right now, a lot of demand for hybrids. Because the EVs, in more extreme temperatures, as they saw in northern Europe, the batteries weren’t lasting as long as they would like. And the charge stations are few and far between. And so hybrids, there’s great demand.

But EVs, there’s declining demand. Because the Europeans are taking the view that this government mandates that you must have an EV by a certain date and you can forget about the choice of any other vehicle, people don’t like mandates. EV growth was ramping up very well on its own. It was a product. The consumers covet it, they want it.

I understand there’s a sort of Twitter angle for governments to get involved and take the credit for saving the planet, but I think they need to take a step back. Let the markets drive the demand. If you tell anyone you must do this by that date, generally, especially after we’ve just been through COVID and all these other things, people don’t react so well. So that to me is probably the greatest part I see in the growth of instability in EVs.

But apart from that, if it’s left up to the consumers, it’s a pretty cool idea. The only thing I don’t like is in cities, like New York, you can’t hear them, which means now you have to pay attention crossing the road. To be honest, you can hear the car coming, ah, it’s not going to hit me. But now with an EV, you can come around that corner, you don’t hear it. But I get it. If everyone has EVs in cities, noise levels, now we just have to remove the horns. And then we’ll be fine. But yes, that’s my greatest concern with EV growth.

David Sickels: That is a genuine concern, especially in cities. You’re right. I mean there’s so much going on there anyway, it’s easy to get distracted. Yeah, that’s definitely an issue.

Lewis Black: Listen, when I was a kid, if you got run over, you kind of deserved it, you weren’t paying attention. So I look at it this way, it’s still a big vehicle, and quite frankly, you should be paying attention. You’re crossing the road.

David Sickels: Well Lewis, I really appreciate your time here today. I learned a lot about your industry and your contribution to the EV industry, so thank you for your time. I really appreciate it.

Nadine Battah: Absolutely.

Lewis Black: Not a problem. Pleasure to be here.

David Sickels: Take care. Nadine. Okay. That was a cool conversation.

Nadine Battah: Yes, it was. That was a lot to take in.

David Sickels: Yeah. What’d you learn?

Nadine Battah: Honestly, I think what really stuck out to me is that tungsten has been used across all sectors in the vehicle.

David Sickels: Oh, yeah.

Nadine Battah: So I didn’t really realize how utilized this metal was.

David Sickels: Yeah, yeah. Extremely important. I mean, at one point I think he said that he could potentially sell three times what they’re producing and not just to the EV industry, I mean all across industries. So that was really interesting. One thing that I was really picking up on, supply chain transparency. I mean, that’s obviously super important when it comes to these kinds of things that we’re getting to in EVs, but across the sector, I mean, supply chain transparency is so important. We saw that with COVID.

Nadine Battah: Yes.

David Sickels: I mean, when everything shut down the supply chain, we are still working out the case there.

Nadine Battah: Right. Yes, we are.

David Sickels: And so being able to get that audit, understand where these materials are coming from, it’s going to open up a lot of eyes as far as understanding-

Nadine Battah: Absolutely.

David Sickels: … When am I going to get my next supply? Where is it coming from? Is there anything on the horizon that’s going to kind of mess that up?

Nadine Battah: For sure. And I also liked how he mentioned the reasons why cobalt or lithium probably wouldn’t work either. So I like how you just kind of cleared that up for us.

David Sickels: Yeah, yeah. I mean, they’re all very important in their own ways, but of course, this, what they’re producing here, is super important. I mean, when you start talking about how you cannot replace that with another metal reliably. That’s, I mean, obviously-

Nadine Battah: It’s insane.

David Sickels: Yeah. They’ve got something going on here. So for sure. Thank you so much for joining me on this podcast today.

Nadine Battah: Thanks for having me. It’s always a pleasure. Always.

David Sickels: It’s always a pleasure having you.

Nadine Battah: Thanks David.

David Sickels: You always bring your own perspective that I think not only me, but our audience, really appreciate.

Nadine Battah: Thanks. I appreciate that, David, it’s always a pleasure.

David Sickels: We will catch you next time. Thank you for joining us and take care.

Nadine Battah: See you.

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