QazMoly nears $240M US funding for tungsten project in Kazakhstan

Kazakh company QazMoly said it could get as much as $240 million in United States funding to develop its Drozhilov project in Kazakhstan if a deal can be struck to sell tungsten output to U.S. interests.

The U.S. Export-Import Bank expressed its interest in potentially financing the project in a letter to U.K.-based Fosbury Capital, which is acting as Drozhilov’s exclusive off-taker and financing partner, QazMoly said Thursday. The potential financing package would cover a “significant portion” of the project’s capital requirements, QazMoly said in a statement.

Any EXIM Bank financing would be conditional on all of the project’s tungsten off-take being sold to the U.S., QazMoly said. The U.S. government considers tungsten a strategically critical mineral.

Tungsten prices have surged fivefold over the past year as underinvestment and tightening Chinese supply push the market towards what BMO Capital Markets warn could become a severe global shortage. Global inventories are low and another deficit is forecast for this year, the bank said this month.

Defence

Tungsten carbide, prized for its extreme hardness and density, is essential in machine parts, drill bits and hard-facing materials as in defence applications.

Global demand for tungsten is expected to grow at an average annual rate of 8%, making it a $10-billion industry by the mid-2030s, QazMoly said.

Project financing will also depend on QazMoly completing the appropriate feasibility studies and EXIM Bank carrying out detailed legal and commercial due diligence on the project, according to the Kazakh company.

“We are delighted to secure this indicative support from EXIM to advance the Drozhilov project, which will create high-value jobs and strengthen global critical mineral supply chains,” QazMoly chairman Aidar Assaubayev said in the statement.

“In line with Altyn Group’s track record and focus on developing its assets for the optimum benefit of its stakeholders, QazMoly looks forward to working closely with EXIM to build on this exciting announcement.”

Family business

QazMoly is part of the AltynGroup, a Kazakh metals, mining and energy conglomerate that’s owned and controlled by the Assaubayev family.

The group also includes gold miner AltynGold (LSE: ALTN), which operates the Sekisovskoye gold and silver mine in the northeastern part of the country.

Drozhilov contains significant reserves of critical minerals, QazMoly said. Besides tungsten, the deposit also holds beryllium and molybdenum.