Macroeconomics and Market Trends The tungsten market is highly responsive to the global commodity market, known for its volatility in both price and demand, with macroeconomic conditions and geopolitical risks being major factors contributing to this instability. Rising geopolitical tensions around the world, exemplified by the ongoing conflicts between Russia and Ukraine and the unrest between Israel and Palestine, are heightening risks in international markets. These conflicts not only disrupt local economies but also have far-reaching effects on global trade and resource distribution, posing significant challenges for industries reliant on stable international relations. Due to political instabilities, the demand for tungsten in the defense industry has been rising, driven by its applications in military products such as projectiles, armor-penetrating ammunition, and other hardware, where its density and hardness are highly valued. The defence industry has witnessed the sharpest rise of all the segments of the tungsten market, but represents only around 15% of the market and has not been a critical enough influence on the global demand to be the main driver of the rise in prices witnessed in the last quarter of FY2024. Market movements are largely fuelled by the supply and demand for high-performance, wear-resistant materials in diverse industries such as automotive, aerospace, and electronics. The widespread application of tungsten in manufacturing cutting tools, drill bits, and components that must endure high temperatures, highlights its critical role in sectors that demand materials with exceptional durability under extreme conditions. Moreover, tungsten’s increasing utilisation in the electronics sector for making electron emitters and electrical contacts also contributes significantly to the market’s growth. 2 Global Relevance ult m Tungsten Market dominated by non-OECD members ◼ China accounts for over 83% of world Tungsten primary (mining) production ◼ Unique properties make Tungsten an essential industrial metal ❑ Highest melting point of all metals and highest tensile strength, high density, hardness close to diamond, thermally and chemically stable, excellent conductor, and environmentally benign ❑ End-market application for light and heavy industrial, energy and military uses include in heavy metal alloys such as high-speed steel, from which cutting and pressing tools are manufactured ◼ Benchmark pricing continues upward trend considering tungsten’s strategic relevance and precarious supply / demand situation Primary Tungsten Production by Country Tungsten Reserves by Country 83.3% 5.7% 3.0% 1.8% 1.5% 1.2% 1.1% 1.1% 0.8% 0.5% Total World – 79kt Total World – 3,700 kt 51.4% 32.5% 10.8% 2.7% 1.4% 0.8% 0.3% 0.1% China Portugal Other Countries Korea, North Russia Spain Vietnam Rwanda Austria Bolivia For tungsten market dynamics update, see: "Inverstors Update/Webinar". Operating and Financial Review continued 8 EQ Resources Limited Annual Report 2024
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