Elmet Group wins $2 billion US tungsten stockpile contract

Sept 14 (Reuters) - Elmet Group ‌said on Monday ​one ​of its units had been awarded a contract worth about $2 billion by the U.S. Defense Logistics Agency (DLA) to help ‌rebuild the National Defense Stockpile and strengthen the country's tungsten ⁠supply chain.

• The contract, which includes a guaranteed funded commitment of $150 million, covers ‌the supply of tungsten ores, ‌concentrates and sodium tungstate to DLA Strategic Materials.

• Tungsten is a critical mineral used in aerospace and defence equipment because its extreme ​heat resistance and hardness allow components to withstand intense temperatures, stress and wear.

• Elmet said it would not begin deliveries to the ⁠stockpile until additional supplies secured through mining investments, offtake agreements and processing-capacity expansions become available, ​in an effort to avoid disrupting supplies to existing U.S. manufacturers.

• The award comes as Washington seeks to secure ​alternative tungsten supplies amid efforts to ‌reduce reliance on China and Russia, with the critical mineral facing tightening global supply due to Chinese export ⁠restrictions and the absence of active U.S. tungsten mines.

• Separately, Elmet said it had secured about $450 million from the U.S. Department of War to accelerate domestic ⁠manufacturing expansion and strengthen partnerships across its tungsten supply chain.

• The investment includes ​an initial $200 million drawdown at closing, with additional funding to follow. In return, the government will receive redeemable preferred equity, warrants representing up to 19.9% of Elmet's ‌common stock on a post-transaction basis, and rights to appoint one independent director and one non-voting board ‌observer.

• The company plans to invest more than $165 million in facilities in ⁠Maine, Michigan and Ohio to ‌expand production capacity, increase ​tungsten output and modernize infrastructure supporting U.S. defense, aerospace and industrial programs.

(Reporting by Katha Kalia in Bengaluru; Editing by ‌Maju Samuel)

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