SMM News, May 9:
It is learned that in March 2026, the Ministry of Natural Resources issued the first batch of tungsten concentrate mining quotas for 2026. The total mining volume under the first batch of national quotas stands at approximately 60,000 tons, an increase of 2,000 tons or 3.45% year-on-year compared with the first batch in 2025. By province, Hunan’s quota rises by 1,550 tons and Henan by 750 tons, while Inner Mongolia, Heilongjiang and Fujian each register an increase of 100 tons. Jiangxi, Yunnan, Shaanxi and Xinjiang keep their quotas unchanged. Guangdong cuts its quota by 240 tons, Guangxi by 230 tons and Gansu by 130 tons.
The news sparked widespread market reaction. The industry had generally anticipated a continued tightening of 2026 mining quotas, making the unexpected moderate increase in the first batch a reversal of market expectations and triggering divergent views among market participants. In response, SMM holds that the marginal increase of 2,000 tons in the first batch of quotas represents structural easing with overall total quantity still under strict control. The short-term sentiment impact outweighs the actual supply increment, while the long-term market trend will hinge on the annual total quantity control and demand matching. As a specially protected strategic mineral in China alongside rare earths, tungsten is subject to an annual total mining quantity control system implemented in two batches each year. The Ministry of Natural Resources releases rigid annual mining quota standards for tungsten concentrate (65% WO₃) in two instalments, strictly prohibiting unregulated mining and over-quota production. Provincial quotas are allocated with preference given to major producing regions featuring superior resource endowments, high compliance and industrial concentration, while quotas for small-scale mines failing environmental protection and safety standards are cut down. In recent years, the policy orientation has featured tight overall supply, structural optimization and intensified crackdowns on illegal mining, aiming to protect strategic mineral resources, stabilize market supply expectations and drive industrial upgrading.
Given the stricter policies targeting illegal mining and over-quota production, a modest rise in tungsten mining quotas is hardly able to drive a tangible increase in actual tungsten concentrate output, and this view is backed by solid logic. First, authorities have intensified crackdowns on illegal mining, leading to an irreversible withdrawal of unregulated supply. From 2025 to 2026, nationwide investigations into unauthorized mining, cross-boundary exploitation and over-quota production have resulted in the shutdown of numerous illegal mines and legal penalties for relevant personnel. The so-called grey-market tungsten supply, once accounting for 10% to 30% of total supply, has largely vanished with little possibility of resumption. The slight quota increase only serves to raise compliant tungsten concentrate output marginally. Second, the production capacity of compliant mines has nearly reached its ceiling. Domestic tungsten mines are faced with declining ore grades, deeper mining depths and rising operational costs. Coupled with stricter constraints on environmental protection, work safety and energy consumption, most compliant mines are already operating at full or near-full capacity with limited room for flexible output growth. Third, allocated quotas do not equate to actual output, with stringent constraints at the implementation level. Mining quotas set a production ceiling rather than a guaranteed output volume. Mines must comply with multiple regulatory requirements covering mining licenses, environmental assessment, work safety, soil and water conservation, and energy consumption, and will be ordered to suspend production for rectification if any standard is unmet. Under the current high-pressure supervision environment, enterprises are unwilling and unable to engage in over-production. Fourth, the long-term policy strategy prioritizes quantity control and quality upgrading with no intention of large-scale production expansion. As a scarce strategic mineral, tungsten is governed by long-term policies focusing on protective exploitation, total output control and higher value-added deep processing. The 2026 full-year mining quota is expected to remain tight, and the moderate increase in the first batch is only a phased adjustment that will not alter the overall tight supply pattern. In addition, SMM sample data shows that domestic tungsten concentrate output fell by around 17% year-on-year from January to April 2026, with the full-year output projected to drop by roughly 10% year-on-year.
In summary, the moderate increase in the first batch of 2026 tungsten mining quotas is a measure for structural optimization and industrial chain stability rather than a policy shift toward production expansion. Under the triple pressures of intensified crackdowns on illegal activities, stringent compliance requirements and deteriorating resource endowments, actual tungsten output will see no notable growth, and the tight supply pattern is set to persist.
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