A $450 Million Bet on a Metal the U.S. No Longer Mines
The Defense Department announced this month that it will invest $450 million in The Elmet Group, part of a push to rebuild American capacity for tungsten, a critical mineral that feeds military production lines ranging from bullets to missiles. The award stands out as one of the department's most direct interventions yet into a supply chain that has become overwhelmingly dependent on foreign processing.
The timing is not incidental. A federal procurement rule barring tungsten that is mined, refined or processed in China, Russia, Iran and North Korea from defense applications takes effect Jan. 1. That deadline forces contractors to locate sources of a metal the United States itself has not mined since 2015.
In other words, the Pentagon is not simply writing a check for a commodity. It is trying to buy time and capacity before a regulatory cliff arrives.
Why Tungsten Is So Difficult to Replace
Tungsten occupies a narrow but strategically vital niche. It has the highest melting point of any metal and is roughly as dense as gold, properties that make it valuable for armor-piercing projectiles, kinetic-energy penetrators and other high-stress military applications where heat resistance and mass both matter. When combined with carbon, tungsten forms tungsten carbide, an exceptionally hard material used in industrial tooling and military manufacturing alike.
Critical-minerals analyst Chris Berry, speaking on his podcast, noted that the metal is also used to fabricate semiconductors for AI data centers, tying the defense-demand story to the wider technology build-out now consuming enormous quantities of advanced materials. He described tungsten as a must-have for the defense industry precisely because there is no good substitute at scale for most of its applications.
That absence of substitutes produces an unusual economic profile. Berry characterized tungsten demand as relatively small in absolute terms but highly resistant to price changes, meaning buyers tend to absorb higher costs rather than switch to alternative materials. For defense planners, that combination of low volume and high inelasticity is exactly the kind of vulnerability that warrants direct government action.
The Policy-Driven Price Squeeze
China dominates the global tungsten supply chain, controlling about 85% of world supply according to government data. It also accounts for roughly 40% of molybdenum, a similar material frequently mined in the same geological areas. The United States, meanwhile, has not produced tungsten domestically in more than a decade.
Demand pressure has intensified amid ongoing conflicts in Ukraine and Iran, which have increased consumption of tungsten-bearing munitions and components. But Berry argued that the rapid rise in tungsten prices stems almost exclusively from policy choices in Beijing and Washington rather than from battlefield demand alone. In his assessment, the free flow of tungsten material is for now a thing of the past, and those competing policies have created two distinct markets — one shaped by Chinese export controls, the other by Western procurement restrictions.
That split carries direct consequences for the Pentagon. When price and availability are set in significant part by regulation rather than geology, supply can tighten faster than industrial capacity can possibly respond.
Mining Is Only Half the Problem
Berry made the case that extraction alone will not resolve the supply problem. The United States also needs the ability to refine and process raw tungsten into usable materials and components, a step that has largely migrated overseas over the past several decades. His formulation is blunt: every mined dollar should be paired with a processing dollar.
That emphasis helps explain why the Pentagon chose a company rather than a mine. Building a processing and fabrication chain involves permitting, capital equipment, technical workforce development and years of lead time — none of which can be legislated into existence by a procurement rule.
Options beyond new mines
Berry outlined several remedies that could supplement domestic production capacity:
- Price protection mechanisms that shield domestic producers from below-cost foreign competition.
- Defense stockpiling to buffer against sudden supply interruptions.
- Greater reliance on allied suppliers to spread supply-chain risk across multiple friendly countries.
Each carries trade-offs. Stockpiles are finite, allied sourcing shifts rather than eliminates dependency, and price floors can distort markets. But taken together they form the standard toolkit for a mineral whose availability is now a national security question.
Why the Pentagon Chose Elmet
In announcing the investment, the Defense Department said it selected Elmet because it is the only U.S.-owned, fully integrated producer of tungsten and molybdenum materials and components. That fully integrated description matters: it suggests a company capable of handling material from raw input through finished component, rather than one that would still need to send product abroad for intermediate processing.
Michael Cadenazzi, the department's assistant secretary for industrial base policy, said the investment reflects the department's commitment to rebuilding critical industrial capacity in the United States. He added that it would strengthen supply chain resilience, support high-quality manufacturing jobs and reinforce the production base behind essential defense systems.
The framing is consistent with a broader shift in Pentagon thinking. Rather than treating commodities as procurement line items to be sourced wherever cheapest, the department is increasingly treating them as infrastructure to be owned, subsidized or protected — particularly when a single country controls the overwhelming share of global supply.
An Industrial Base Problem, Not Just a Mineral One
Tungsten is instructive because it sits at the intersection of several pressures converging on the U.S. defense industrial base. It is essential to weapons production yet unavailable domestically. Its supply is concentrated in a strategic competitor. Its demand is rising because of conflicts abroad and because of an AI-driven semiconductor boom that consumes the same material. And its processing chain, not just its geology, has been offshored.
A $450 million investment does not resolve any of that on its own. It does, however, signal that the department is willing to fund the unglamorous middle of the supply chain — the refining, alloying and component manufacturing that rarely attracts attention until it is missing.
What to Watch Next
The most immediate test is the Jan. 1 procurement deadline. Contractors will need to demonstrate that tungsten in defense applications does not originate from the four barred countries, a compliance burden that could expose gaps between what the rule requires and what domestic and allied supply can actually deliver on schedule.
The second test is whether processing capacity follows the mining investment. If refining and fabrication capacity expands in parallel, the $450 million becomes the first step of a genuine rebuild. If it does not, the United States may find itself able to mine a strategic metal it still cannot turn into a finished weapon component — which is precisely the problem Berry's mined-dollar-versus-processing-dollar formulation is meant to highlight.
For now, the Pentagon has made its wager: that tungsten is too important, too concentrated and too irreplaceable to leave to market forces alone.
This article is based on reporting by Defense News. Read the original article.
Originally published on defensenews.com
