While other commodities continue to face market headwinds, a seldom-discussed metal has bull market written all over it – here’s why one company should be on your radar immediately…
It’s found in everything from drill bits to solar panels.
It’s practically immune to corrosion and has an extremely high melting temperature.
Virtually any product which requires steel contains it.
Yet it’s considered the world’s second most endangered substance by the British Geological Survey.
I’m referring to tungsten.
Compared with other metals that are currently taking a beating on Wall Street, tungsten is showing remarkable resiliency because of its high supply risk.
According to the survey, the risk is due to such factors as location and concentration of production and reserves.
That’s not surprising.
China is the undisputed leader in production and consumption of tungsten.
The country accounts for 83% of global production and holds nearly 62% of global reserves.
In terms of demand, China makes up 55% of global consumption, while the US is in second place at just 13%.
Tungsten is also considered endangered because it has lower recycling and lower substitutability than other metals.
In other words, even if supply is being constrained by rising demand, there’s no other metal available that can take its place in the manufacturing sector.
Tungsten recycling is extremely crucial for helping to offset shortfalls, and is estimated to account for 35% of global supply. However, that number is already considered at maximum capacity by the industry, who believes it’s not possible to recycle any more than that from scrap.
With a recycle ceiling and zero alternatives for companies who rely on tungsten for their goods, the gap between demand and supply will inevitably widen.
As a result, tungsten looks set for a massive price surge while its peers are struggling to stay relevant.
In the short term, expect spot tungsten to provide investors with solid gains as demand continues to rise.
That said, come 2014, China’s vice-grip on the industry will begin to loosen due to a new player emerging from beyond the Great Wall.
In fact, there is a highly profitable play to consider over the course of the next 6 to 12 months: Woulfe Mining Corp. (TSX:WOF).
Though not a pure-play tungsten company, Woulfe is a Canadian-based mining firm whose flagship project was once the world’s largest tungsten mine for over forty years.
As the 100% owner of the Sandong tungsten mine in South Korea, Woulfe is going to be a game-changer.
Their 2012 feasibility study identified Sandong as having an indicated resource of 16,431,000 tonnes and inferred down dip resource of 34,519,000 tonnes.
By the end of 2013, they expect to re-open Sandong and begin producing high quality ammonium paratungstate (APT).
When it reaches full operating capacity, it’s estimated that Sandong will account for 7 – 10% of global tungsten production.
It was due to weak metal prices that forced the closure of Sandong in 1992. For years leading up to the shutdown, the mine accounted for more than 50% of South Korea’s export revenue.
Now two decades later, with a new owner at the helm, Sandong is ready to return to its former glory.
But don’t take my word for it…ask Mr. Buffet himself.
Among his Berkshire Hathaway holdings is International Metalworking Companies (IMC) which overseas a variety of metalworking assets.
Last year, IMC bought a 25% stake in Woulfe’s Sandong project.
IMC also happens to own TaeguTec Ltd., Sandong’s former owner and now South Korea’s largest manufacturer of tungsten-based tools and operator of the only integrated tungsten production plant in the world.
With the Oracle of Omaha himself foreseeing the rise of tungsten, it’s bound to pique the interest of investors.
Better jump in before that interest puts the metal (and Woulfe) out of reach.
Yours in profits,
for Top Stock Millionaire