Transcript: Implications of U.S. Executive Order on Supply Chains

Lewis Black, CEO of Almonty Industries (Paris, France), recently joined the MP Interview Series to discuss an executive order signed by President Joe Biden that will begin a review of the supply chains that support several crucial American manufacturing industries, including automobiles, pharmaceuticals, and clean energy. See below for a complete transcript.

In this episode, he covers the intention to insulate the American economy from future shortages of critical imported components, how this move might help open up critical supply of important rare earth materials and help manufacturers obtain raw materials from suppliers outside of China, how durable tungsten is against corrosion and oxidation, and how new production sources of tungsten are critical for increased global supply.

[introductory comments]

Rebecca Bickham: Hi, Lewis. Thank you for joining me today. How are you?

Lewis Black: I’m very well. Good afternoon. I’m in Europe right now, so it’s a lovely afternoon. But I hope your day’s going great so far.

RB: It is. Thank you so much. The first thing I’d like to ask you is to briefly introduce yourself to our listeners and give us a summary of your background and experience.

LB: My name is Lewis Black. As you said, I’m the CEO of Almonty Industries. We are the largest producer of tungsten concentrate outside of China. Tungsten is obviously used predominantly in aerospace, automotive, defense, and medical, and on the new generation of batteries for EVs, semiconductors, and for instance, tungsten fabrics for 5G networks. We have a very key role to play in strategic metal demands of our customers.

RB: Fantastic. Lewis, I understand that the order is intended to start an effort to insulate the American economy from future shortages of critical imported components. The President’s move comes as a global shortage in semiconductors — a key component in cars and electronic devices — has forced several major American auto plants to close or scale back production and sent the administration scrambling to appeal to allies like Taiwan for emergency supplies. What more could you tell us about this, and how might this move open up critical supply of important rare earth materials and help manufacturers obtain raw materials from suppliers outside of China?

LB: I think that, to review the President’s — it’s a 100-day review, and they commenced almost immediately when he became the President. It’s really any day now we’re going to start seeing — hopefully start seeing — the conclusions this review comes to. But I don't think that the conclusions will be terribly surprising. Ultimately, a lot of the strategic metals and industrial metals are dominated in their output from China because for the first 30 years, China has developed a very autonomous supply chain for obvious reasons. They wanted to be able to perfect their supply chain to be able to provide all the things that we all enjoy very easily nowadays. I think that semiconductors is a great example of the fragility of most of our supply chains. Semiconductor business is really no different from any other that we see. It reacts — supply and demand is in basic equilibrium, normally tracking inflation.

What happened last year was an exceptional circumstance because all of us are governed by our balance sheet. We all like to keep inventory as low as possible. With the global shutdown through COVID, everybody started running their inventories down. What no one imagined was that after we all returned home, we all decided that our laptop — we needed to get a new one. Our phone, we were using this old phone. Let’s get another one. These electronic consumables, the demand was never anticipated. As a result, with inventory stocks very low for semi-conductors, the economy’s now decided to sort of reopen, the car manufacturers have found themselves out of pocket.

And it’s not so easy to start producing more semiconductors. Semiconductors — I think people just say flippantly, “Oh, semiconductor.” This field is dominated by the U.S. and South Korea. These are the two primary countries, and then a distant third is obviously in Taiwan. These items are at the cutting edge of technology. They really are extraordinary pieces of design. I believe it takes 18 weeks to make one semiconductor, when you track it all the way through the plant. Obtaining the raw materials to produce more is one thing, and then you have to increase the capacity that exists in these highly technically advanced factories and plants.

I think really demonstrated, in on particular area, the fragility of the supply chain, and I don't think it’s unique to semiconductors. I think the review will come to conclusion that I think everyone already very much understands, which is you have to give American manufacturers more options to more diversity in order to ensure that, if one tap goes off, another tap is available. It doesn’t mean that you should be saying, “Let’s not buy from China.” I think that’s an irrelevance.

I don't think anyone should politicize this. It makes common sense to have options and not all the eggs in one basket. That’s where I expect the review to come out, just to say, “We need to expand the opportunities for American manufacturers.” I think last week Canada announced they’re starting to finance a program to look at developing also a supply chain. So they’re sort of jumping the gun. But I do expect a review to confirm what I think we already know.

RB: That’s a great explanation. Thank you so much for that. I want to change course here for a moment. We’ve started doing a short series of questions in our podcast that I’d like you to answer. They’re designed to help the listeners get to know you a bit better. Let’s start with the first one: What’s your favorite TV show, movie, podcast, book, or sport that you're consuming right now?

LB: All of that I’ve had to abandoned because I have a new addition to the family who’s four-and-a-half years old. Essentially, whatever he watches is what I have to love.

RB: I understand that. Ok great. Next question: Who do you consider —

LB: Actually, whatever he reads or watches, I have to love. No limits.

RB: I get it.

LB: Whatever he’s doing is what I have to be in love with.

RB: Okay. Who do you consider your hero or mentor?

LB: I think that’s a difficult one. I would say, in a rather clichéd way, I suppose my father, may he rest in peace. Because he worked extremely hard to earn enough money to give me a great education, which of course he or his father never had that opportunity. So I suppose — and he ended up essentially in an early grave at 70, I think the COVID sort of wore him out. So I suppose, if anyone, one consistent person in my life, I would say it would have to be my dad.

RB: He sounds like a nice person. I like that answer. What’s your biggest pet peeve professionally?

LB: Bad manners. I’m an English American, a naturalized American, but my mum would always say, “Good manners are free.” So I hate bad manners. That’s just — that’s my pet peeve.

RB: I agree with you there. Okay, great. Thank you so much for answering those questions for us. Let’s switch gears again and continue on with our discussion. My next question for you is: Why is tungsten important and how durable is it against corrosion and oxidation?

LB: Tungsten is the most, has the highest wear property of any metal on the planet. It has a smelting temperature just slightly less than the temperature of the sun. So you can’t smelt it in the applications. You sinter it into alloys. Whether your wear parts, such as gears, drills, anything that generates friction and heat, tungsten is extremely — well, it is the unsubstitutable metal. The interesting thing is, it’s incredibly brittle. So even though it’s very durable, if you drop it, it will smash into a million pieces. It’s quite an unusual metal, and it makes it very difficult to extract from the ground. In terms of oxidization, once — tungsten in its concentrate form, in is ore form as we bring it out from underground. If you leave it unserviced long enough, it will oxidize in part. But once it’s been concentrated, it will essentially — you can recycle it from its products. It is almost indestructible. You lose a little bit every time you recycle it, but oxidization is not an issue with tungsten.

: Are new production sources of tungsten critical for increased global supply?

LB: 82% of the world’s production of tungsten comes from China. When they arrived in the market in the 1980s, a huge [amount] of tungsten arrived from China at collapsed prices, and pretty much everyone went out of business. We are really the last survivor. One of our mines in Portugal will be running for 126 years uninterrupted. It’s fifth generation. We have managed to preserve the experience and knowledge needed to produce tungsten, and we’ve just started construction of formerly the world’s largest tungsten mine in South Korea. We’re only able to do that because of the knowledge and expertise that we have.

In terms of new sources, tungsten in the ’50s and ’60s was more valuable than gold because it’s heavily used in defense sectors. Back then, obviously the Cold War was well in its stride, and so consumption of tungsten was quite dramatic. Ultimately, a lot of the mines in safe jurisdictions like the United States, Canada, and such, they were either played out or now are uneconomical because they are low-grade, what’s left. In terms of projects in safe jurisdictions, you really don’t have an awful lot of choice. We have the ones that we feel are cost-competitive with China, which is very important to our customers.

Then there are projects in Kazakhstan and the Caucasus in Russia, but it’s a declining resource where, at the moment, because you know you're very price dependent, trying to control not just the output but also the price of the commodity. You’ve got to be extremely good at your game to be able to eke out a margin. We’ve always managed to do that. But low-grade projects struggle. They struggle nowadays.

RB: That was great information. Thank you. My final question I’d like to ask you is: Could you tell us a bit about Almonty Industries, and could you give our listeners your website in case they want to find some further information out?

LB: Sure. Almonty Industries, as I said, is the largest producer of tungsten concentrate outside of China, which would consider to be the operational team outside of China and one of the best in the world. Some mines that we have have done this for more than five generations, so we have quite a lot of depth of knowledge behind us. We don’t produce or work in any other metals. We’d rather be the best at one than okay at many. I think if you go to the website,, you can see much greater depth of who we are and what we’ve done and what we are continuing to do.

RB: Fantastic. This is where we’ll end our interview today.

[concluding statements]