Almonty Industries (NASDAQ:ALM) is set to supply tungsten produced in Spain to Swedish engineering group Sandvik (STO:SAND), potentially adding another source of the critical mineral to the European market.
Almonty announced on Thursday it has entered a ‘long-term’ agreement with Sandvik subsidiary Wolfram Bergbau und Hütten (WBH) covering tungsten concentrates produced by re-treating existing mining waste at its Los Santos site in Spain.
The agreement, the company says, is designed to create an expedited tungsten supply source by recovering material that has already been mined, rather than developing a new operation from scratch.
According to Almonty, the agreement is structured on a take-or-pay basis and anticipates the resumption of production at Los Santos.
Located around 50km south of Salamanca, Los Santos is an open-pit scheelite skarn operation that has been on planned care and maintenance since February 2020.
Material supplied to WBH will come from re-treating the mine’s existing tailings inventory.
Almonty CEO Lewis Black says the agreement combines a committed buyer with support for restarting the operation.
“What this agreement gives us is a take-or-pay commitment from a Sandvik Group company, index-linked pricing with a floor beneath it and a sharing of the financial requirements to reactivate the property,” Black says.
“That combination is what allows us to bring a European Union asset back into production with a defined route to market from the first shipment.”
Europe looks beyond China
The agreement comes as European countries seek alternative supplies of tungsten to reduce their reliance on China, which accounts for around 80% of global mine production.
Spain hosts Western Europe’s largest tungsten reserves, but efforts to bring new projects into production have faced lengthy permitting processes.
Almonty’s main operation is the Sangdong Mine in South Korea, where it began processing operations this year to supply markets outside China. The company also produces tungsten from the historic Panasqueira Mine in Portugal.
In Spain, Almonty has held a licence for its Valtreixal Project since 2013 but is still awaiting the permits required to begin operations. In July, the tungsten project received a non-binding negative environmental assessment from a regional government.
The Los Santos agreement gives Almonty a committed route to market before production resumes, while also providing customer capital to help reinstate the processing plant.
For WBH, the agreement provides another documented non-Chinese, EU-origin source of tungsten concentrate for its downstream operations.
Tailings provide faster supply route
Almonty’s restart strategy at Los Santos is focused on re-treating tailings left behind from previous operations rather than beginning new primary extraction.
Following testing and trials, the company says it has materially improved tungsten recoveries from the tailings.
WBH — part of Sandvik since 2009 — operates a refining and powder manufacturing complex at St Martin im Sulmtal, Austria.
The facility processes scheelite concentrate from its own Mittersill mine, as well as concentrates sourced globally and recycled secondary tungsten materials.
According to Almonty, the facility is the only integrated tungsten smelting plant outside Asia, including Russia, while the Sandvik business also operates dedicated tungsten recycling capacity.
However, Black cautions there is no guarantee the Los Santos model will prove successful.
He says the project “could be a success or a total failure”, but if successful, Almonty intends to replicate the model at “multiple similar sites across Iberia”, where he estimates there could be as many as 100 potential sites.
US tungsten restrictions loom
The agreement also comes ahead of tighter US defence procurement rules taking effect in 2027.
Restrictions covering specified tungsten materials originating in China, Russia, North Korea, and Iran are set to extend further upstream to include mining, increasing the importance of documented non-Chinese tungsten supply for covered US defence applications.
Earlier this week, Almonty also partnered with Rwanda to source tungsten produced by local miners and conduct exploration in the African nation.
Rwanda is currently Africa’s largest tungsten producer, adding another potential source to Almonty’s expanding supply network outside China.
Almonty describes itself as a supplier of conflict-free tungsten. Alongside ramping up its South Korean operation, the company has operations in Portugal and additional projects in Spain and the US.
Write to Jackson Chen at Mining.com.au
Main Image: Almonty Industries
