TUNGSTEN consumers in the West are increasingly concerned at China's grip on the global tungsten market, prompting them to seek direct ownership of non-Chinese mines producing the steel-hardening metal.
The search for non-Chinese supplies has led consumers to the door of Melbourne-based Heemskirk, one of a handful of non-Chinese miners of tungsten from its Los Santos project in Spain.
Heemskirk revealed yesterday that it had received a ''number of corporate approaches'' on Los Santos, the world's fifth-biggest non-Chinese tungsten mine and the only significant tungsten mine development in the past 10 years.
Heemskirk would not elaborate, but analysts speculated that any number of European tungsten consumers (makers of machine and drilling tools, industrial high-temperature metals, lights and mobile phones) could be looking to acquire a direct stake in the mine to ensure supplies.
Los Santos would be worth $50-$60 million in a trade deal, although the expectation is that Heemskirk would probably only want to let go of 25 per cent of its main operating asset.
A similar sized tungsten mine, the Panaqueira mine in Portugal, was acquired by Japanese trading house Sojitz in 2008 for a price believed to have been $US50 million.
That was followed last year by Swedish mining and construction toolmaker Sandvik buying the Mittersill tungsten mine in Austria, again to secure non-Chinese tungsten supplies.
China controls about 75 per cent of the world's tungsten production and, as with the rare-earths industry, it is not backward in striving to ensure that the long-term needs of its industrial base are satisfied.
Because of a lack of new mine developments, tungsten production has been falling by 5 per cent annually since 2004.
But demand has been growing at 3-6 per cent, with China accounting for virtually all the growth.
Apart from Los Santos, Heemskirk also owns 40 per cent of the Pajingo goldmine in north Queensland. The group's equity share of Pajingo output is about 25,000 ounces a year.
It also owns a business in Canada that supplies drilling muds to the oil industry.
The value of the group's assets is not fully reflected in its share price. At yesterday's close of 52¢ a share - up 2¢ - its market capitalisation was $57 million.
A recent broker valuation valued the shares at 85¢ to $1.20.
