Tungsten West (AIM:TUN) has entered a binding eight-year supply and offtake agreement with Elmet Technologies, part of The Elmet Group, a US vertically integrated producer of tungsten products and advanced materials.
The AIM-listed company owns and operates the Hemerdon tungsten and tin mine in Devon.
Under the agreement, Tungsten West will supply Elmet with 1,000 tonnes per annum of contained tungsten trioxide (WO₃), priced against European Ammonium Paratungstate pricing.
At prevailing commodity prices and exchange rates, that equates to an indicative nominal value of over £1.4 billion across the term, though the company stresses this is not guaranteed revenue and will depend on prices, quantities and delivery specifications.
The deal also allows Tungsten West to request Elmet process an additional 500 tonnes annually to meet UK Government strategic requirements and domestic industry demand.
That flexibility dovetails with the National Wealth Fund's up-to-£71 million investment in Tungsten West announced in August, which carries an exclusive negotiation period for the UK Government to procure up to half of Hemerdon's annual tungsten output.
Elmet's own expansion is backed by a $450 million committed investment from the US Department of War and a Defense Logistics Agency contract worth up to $2 billion to supply the US National Defense Stockpile, and it has identified long-term mine offtakes as central to securing feedstock for that capacity.
"This is a landmark commercial agreement for Tungsten West and represents a major step in establishing Hemerdon as a strategically important source of tungsten for the Western world," said chief executive Jeffery Court.
Hemerdon's production is now underway, positioning the mine as a link in a mine-to-market supply chain serving UK, US and allied critical mineral needs.
News Intelligence what this means for the company
Tungsten West has locked in an eight-year offtake agreement with US-based Elmet Technologies to supply 1,000 tonnes annually of tungsten trioxide, with an indicative nominal value exceeding £1.4 billion—a binding commitment that anchors revenue for the company as it ramps production at Hemerdon. The deal dovetails with the National Wealth Fund's £71 million investment announced in August and Elmet's own $2 billion US Defense Logistics Agency contract, positioning Hemerdon as a critical Western source of tungsten at a time of geopolitical supply focus.
- Elmet Technologies gains long-term feedstock security for its US-backed expansion, reducing its own supply risk as it scales to meet US National Defense Stockpile demand.
- The UK Government's exclusive negotiation right to procure up to half of Hemerdon's output (secured under the National Wealth Fund agreement) now sits alongside a binding commercial offtake, creating potential tension over allocation—though the deal permits Tungsten West to request Elmet process an additional 500 tonnes annually to meet UK strategic requirements.
The offtake agreement materially de-risks Tungsten West's path to cash generation by securing a binding buyer for 1,000 tonnes annually across eight years, eliminating commodity spot-price exposure for that volume. However, the £1.4 billion nominal value is explicitly not guaranteed revenue and depends on commodity prices, quantities, and delivery specifications—so execution risk on ramp-up and cost control remains the critical variable for shareholder returns.
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