This article is a sponsored feature from Mining.com.au partner Group 6 Metals. It is not financial advice. Talk to a registered financial expert before making investment decisions.
The Dolphin Tungsten Mine was discovered over 120 years ago near the town of Grassy on the southeast coast of King Island, the most western large island in the Bass Strait between Victoria and Tasmania.
First operated between 1917 and 1992, Dolphin was mined intermittently until the 1990s when low tungsten prices led to mine closure. Until the 1970s, mining was open pit before operations transitioned to underground at both Bold Head (a satellite deposit discovered in the 1960s) and Dolphin.
After a challenging first 12 months of operation, today, Group 6 Metals (ASX:G6M) is sailing full steam ahead with what CEO Keith McKnight tells Mining.com.au is the Western world’s highest grade tungsten (element symbol ‘W’) deposit, having set several production milestones in 2024.
A new production high of 14,606 tonnes was achieved during Q2 2024, which McKnight says demonstrates its strategies are working for optimising ore extraction, maintaining plant operations, and improving recovery rates.
“These efforts contributed to higher production outputs and underscored our commitment to operational improvement and efficiency,” the CEO tells this news service.
“The process plant is benefiting from the higher-grade courser feed material which is resulting in higher recoveries. We have undertaken a review of the process plant in consultation with the OEMs and have identified opportunities to improve reliability and performance of the process plant which we have already made good progress on.
“All in all, it sets up well for the step change in production we are forecasting for the remainder of 2024.”
It’s been smooth sailing for Group 6 Metals so far in 2024. In March, Dolphin’s mining operations first achieved a production milestone by extracting 49,609 tonnes of ore with an average tungsten trioxide (WO3) grade of 0.48%. During March, 97 dry tonnes of tungsten concentrate was produced with an average grade of 60% WO3, while 93 dry tonnes of concentrate were shipped at a slightly lower grade of 59%.
“All in all, it sets up well for the step change in production we are forecasting for the remainder of 2024”
If having the highest grade tungsten deposit in the western world isn’t enough, the company is prioritising higher-grade ore from the open pit as feed to the process plant, while lower grade ore is being stockpiled for blending with the high-grade underground ore.
The CEO notes there is an excellent opportunity to upgrade lower grade ore currently not in the mine plan, which will increase mined ore volumes and feed grade, improving overall recovery.
“Mining at Dolphin has hit its straps with the development of the stage one pit shell, and the start of mining high-grade C lens achieving fantastic grades. The strip ratio is decreasing as we progress into the stage one open cut, which is providing an opportunity to rationalise equipment and reduce costs,” McKnight adds.
“With high-grade material being fed to the process plant boosting production and a renewed focus on efficiency, we are confident we can achieve cashflow positive operation within the next three to four months. That will be a significant achievement for our company.”
Tough and versatile
Why is tungsten a globally significant metal?
In the Earth’s crust, it is estimated to be 1.5 parts per million of tungsten – or about 1.5 grams per tonne of rock. It’s about as abundant as tin or molybdenum and half as plentiful as uranium.
Tungsten is one of the toughest materials found in nature – super dense and almost impossible to melt. It has the highest melting point of all pure metals (6191.6°F or 3422 °C), lowest vapor pressure, and the highest tensile strength.
It’s the fourth hardest element, after carbon, boron, and chromium with a density comparable to that of gold and uranium while being 1.7 times higher than lead. Tungsten is one of the five refractory metals – the others being niobium, molybdenum, tantalum, and rhenium – and such metals exhibit extremely high resistance to heat and wear. Tungsten is also conductive and resists corrosion.
Group 6 has an offtake agreement with Wolfram Bergbau und Hütten – a global supplier of tungsten powders and a subsidiary of the US$23 billion Sandvik Group (STO:SAND) for 35,000 metric tonne unit (mtu) of WO3 per annum for four years.
It has another offtake deal with Luxembourg-headquartered Traxys – a global physical commodity trader for 82,500 mtu for four years.
The major use for tungsten is in cemented carbides (also called hard metals), which have a hardness approaching that of diamond – ideally used in cutting applications and in wear-resistant materials.
Tungsten carbides are used primarily in the metalworking, mining, oil drilling, and construction industries. The metal and its alloys have applications in everyday living including electrodes, light bulbs, wires, welding, and as components in electrical, heating, and lighting.
Particularly strong growth is forecast to come from renewables (primarily wind turbines and solar panels), as well as mining and construction – the most tungsten-consuming segment in 2021. In mining and construction, the metal is primarily used in drill bits, hammers, and tunnel-boring machines.
Tungsten is widely used in the aeronautical and defence sectors where consumption is forecast to double over the next five years. The metal is used in a range of counterweights for satellite and helicopter blades, missiles, and cockpits to increase the efficacy of vibration-warning control.
Other industrial applications include robotics and automation, and where steel tools wear quickly. Chemical compounds of tungsten are used in a range of applications including catalysts and paint pigments.
Strong refractory metal
The strong refractory metal is not typically sold as a raw ore – it’s chemically extracted from crushed ore and a partially refined product, such as ammonium paratungstate (APT), which is then sold for further processing.
In April, Group 6 conducted trials with HPY Sorting Technology to evaluate the potential of ore sorting technology to enhance the processing of both low-grade and high-grade ore from Dolphin.
Group 6 Metals is now in discussions with HPY Sorting Technology to conduct further testing, with a preference for on-site trials in Q4 2024.
Representative scheelite ore samples in April were submitted for testing and divided into low-grade ore sample OS 001 and high-grade ore sample OS 003. The low-grade ore sample OS 001 had an average grade of 0.22% WO3, while the high-grade ore sample OS 003 averaged 0.61%.
In OS 001 ore, 66.05% of the material containing 0.02% or less was classified as waste rock. Similarly, in OS 003 ore, 55.30% of the material containing 0.093% or less was classified as waste rock.
McKnight says while further testing is required, these results indicate ore sorting can significantly increase the grade of the processed material while achieving high recoveries.
“As higher-grade ore from the open pit is prioritised as feed to the process plant, lower-grade ore is being stockpiled for blending with the high-grade underground ore,” the CEO said in a recent company announcement.
“As the ore sorting trials are indicating, there may be a significant opportunity to sort this ore which would bring it forward in the production plan. The opportunity may extend to treatment of high-grade ore also which could significantly improve the performance of the process plant and lower unit process costs.”
HPY Sorting Technology manufactures more than 95% of the sorter’s sensors and other components itself and assembles the machines in its recently commissioned 100,000m2 factory in Ganzhou. Since designing and building its first ore sorter in 2015, HPY has developed a range of sorters which utilise proprietary AI software to rapidly classify and separate ore streams into “accepts” and “rejects”.
Globally significant
Global mine production of tungsten was estimated at 78,000 tonnes in 2023 (USGS), worth some US$3 billion.
About 75% of the world’s tungsten supply is found in China, although other ore deposits are known in the US, South Korea, Russia, Bolivia, and Portugal. In 2022, the Biden Administration announced it was working to increase US stockpiles of critical minerals, including tungsten.
Tungsten resources have been identified in all Australian jurisdictions apart from Victoria and South Australia. Western Australia holds 53% of Economic Demonstrated Resources (EDR) of tungsten, Tasmania 26%, and Queensland 18%, with minor resources occurring in the Northern Territory and New South Wales, according to Geoscience Australia.
Queensland has been a significant producer for about 130 years and hosts EQ Resources’ (ASX:EQR) Mt Carbine – the largest producing tungsten mine in Australia. However, with an average reserve WO3 grade of 0.92% – the highest such deposit in the western world – Group 6’s Dolphin more than doubles Mt Carbine.
As a result of tungsten’s importance to the economy and its production being concentrated in just a few countries, it has been included in global critical minerals lists including in Australia, the US, and European Union.
Although tungsten occurs as tungstenite-tungsten disulfide (WS2) – the most important ores are the tungstates such as scheelite (calcium tungstate, CaWO4), stolzite (lead tungstate, PbWO4), and wolframite, which is a solid solution or a mixture or both of the isomorphous substances ferrous tungstate (FeWO4) and manganous tungstate (MnWO4).
Tungsten ores are concentrated by magnetic and mechanical processes with the concentrate then fused with alkali. The crude melts are leached with water to give solutions of sodium tungstate, from which hydrous tungsten trioxide is precipitated upon acidification. The oxide is then dried and reduced to metal with hydrogen.
Battle for wolfram
Like the Dolphin Mine, tungsten is steeped in history.
Demand for tungsten led to the battle for wolfram (its primary ore), which was the most important economic battle fought by the allies in the Iberian Peninsula in 1944. Neutral Spain was at the centre of a dispute between Germany and Great Britain which both needed wolfram for weapons to fight the war.
A German ambassador in March 1943 said to Minister of Industry and Commerce Demetrio Carceller: “Wolfram is to us almost what blood is to man.”
The attempt to deprive German industry of the mineral through embargo on exports to all warring factions was a focus of the relationship between the US and Spain between January and May 1944. During the protracted dispute, differences cropped up in which Washington was firmly against such a restrictive regime.
Britain and its allies convinced Spain to limit exports to Germany but not before the business of selling wolfram made tonnes of money for its miners and grew to represent 20% of the value of Spain’s annual exports.
Tungsten in the modern world remains one of many metals dominated by China, which concerns the US military top brass in terms of supply.
Amid concerns that China is buying and assembling large stockpiles of critical metals such as tungsten there is a growing sentiment for more western supply.
Optimistic outlook
As such, looking ahead, the market fundamentals look solid for tungsten with McKnight very optimistic about the market fundamentals and growth of Group 6 Metals.
“The medium to long-term market outlook looks very positive, with strong demand from construction, mining, energy and defence sectors and also some exciting growth in new areas such as tungsten wire cutting for solar PV cells and in semiconductor manufacture,” the CEO tells this news service.
“Medium-term, we are also focused on the integration of renewable energy which will lower our carbon footprint and reduce our power generation costs significantly. We are working with a Tasmania-based fund called Climate Capital to execute the first part of the strategy which is the installation of solar array and batteries with the potential to replace up to 49% of the current demand.”
In 2023, there were lower-than-normal trading volumes as destocking of inventories built up in 2022 continued. Despite this, McKnight says the Ammonium Paratungstate (APT) CIF Rotterdam price remains stable due to tightening of Chinese domestic supply, and more activity from Chinese buyers in western markets.
Ammonium Paratungstate CIF Rotterdam prices increased during the June quarter to US$335 to US$360 per mtu. This is comparable to June 2018 which hit a high of US$350 before dropping back to US$280.
The price of tungsten rose sharply after the global financial crisis (GFC) of 2007-2008 from less than US$200/mtu of APT in late-2008 to mid-2009 to reach a peak of US$480/mtu in 2011. The rise was due to growth in demand and tightening of supply by China.
Birth of Dolphin
The Dolphin deposit was discovered in 1911 and was mined intermittently until the 1990s, when low tungsten prices led to mine closure. Located on King Island in Bass Strait, the deposits comprise tungsten and minor molybdenum mineralisation within scheelite skarns replacing dolomitic metasedimentary units of the Grassy Group.
In 2019, Group 6 Metals (then called King Island Scheelite) released a Feasibility Study with the deposits combining for a total inferred and indicated resource of 11.36Mt grading 0.90% WO3.
Just 130 years before the Dolphin deposit was discovered, in 1781 the existence of tungsten was suspected when Carl Wilhelm Scheele and T.O. Bergman made previously unknown tungstic acid from a material today called scheelite.
Two years later, Spanish brothers Juan José and Fausto D’Elhuyar were credited with discovery of the element when they isolated tungsten from wolframite ore. The names tungsten and wolfram have been used for the metal since its discovery – hence the element symbol W.
Write to Adam Orlando at Mining.com.au
Images: Group 6 Metals & Rochelle Padua
