Currently, the low availability of tungsten concentrate persists, with strong demand from both Western and Chinese consumers, all of whom are trying to secure long-term material supply to cope with production uncertainties. In addition, recent tariffs implemented in the US are also pushing Western tungsten consumers to secure non-Chinese and sustainable supply, which remains quite scarce. This aligns with EQR’s strategy to support the redevelopment of Western mines in favourable jurisdictions. While numerous projects have been announced in the recent years to provide new Western supply, very few are currently operating, and even less are able to reach their nameplate capacity, putting more pressure on the supply side, a favourable factor for EQR’s own production. However, a few projects are due for completion in the next year or so, and this additional supply, pending that commissioning goes as per announced plans, may have a detrimental impact on the APT price. In China, while the government is limiting the export of non-processed material, there is currently no indication that a total export ban could be considered. Should this ever happen, EQR would be in a leading position to support the Western strategic supply. In line with global industry trends, the tungsten market is set to experience changes in supply allocations. According to Fastmarkets, ‘The total tungsten (tungsten trioxide content 65%) mining quota in China will be 114,000 tonnes in 2024, which was up by 3,000 tonnes from 111,000 tonnes in 2023,’ as reported in August 2024. This increase in the mining quota reflects a growing demand for tungsten, which is pivotal for the strategic planning and operational adjustments moving forward. As the largest producer of tungsten, China’s production levels are significant indicators that directly influence global supply and pricing strategies. 44 43 54 53 70 70 71 79 86 80 80 64 102.3 114.7 122.7 122.0 139.1 140.7 134.7 149.5 149.4 143.8 136.0 120.2 0 0 0 0 0 0 0 0 0 0 1 2 58.4 71.7 69.0 68.6 69.6 70.4 63.4 70.8 62.9 63.9 56.0 56.1 0 20 40 60 80 100 120 140 160 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 FREQUENCY Rolling Frequency Rates 2024 LTIFR Average QLD Quarries (LTIFR) TRIFR Average QLD Quarries (TRIFR) CIFR MTIFR 280 290 300 310 320 330 340 350 360 370 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 US$ / mtu APT Price CIF Rotterdam - (US$/mtu WO3) High Mid Low APT price changes 12 months High, Mid & Low. Source: Fast Market APT Price CIF Rotterdam. APT CIF Rotterdam prices rose to US$335-360 per mtu by the end of June, reaching a two-year high as increasing demand coincides with tightening supply. Given the range of factors which contribute to the price of tungsten, and the fact that pricing is subject to negotiation, it is difficult for EQR to predict with certainty the prices at which tungsten will be sold. The effects of changes in assumptions about future prices may include, among other things, changes to Mineral Resources and Ore Reserves estimates, as well as the assessment of the recoverable amount of EQR’s assets. Operating and Financial Review continued 10 EQ Resources Limited Annual Report 2024
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