The War Department announced this month that it will invest $450 million in The Elmet Group to strengthen the U.S. supply chain for tungsten. The critical mineral is used to manufacture military weapons ranging from bullets to missiles.

The investment arrives as a federal procurement rule approaches its Jan. 1 deadline. That rule bars tungsten mined, refined or processed in China, Russia, Iran and North Korea from being used in defense applications.

In announcing the decision, the War Department said it selected Elmet because it is “the only U.S.-owned, fully integrated producer of tungsten and molybdenum materials and components.” That distinction puts the company at the center of the department’s effort to expand domestic capacity.

“This investment reflects the Department’s commitment to rebuilding critical industrial capacity in the United States,” said Michael Cadenazzi, the War Department’s assistant secretary for industrial base policy.

Cadenazzi added that the investment will “strengthen supply chain resilience, support high-quality manufacturing jobs, and reinforce the production base behind essential defense systems.” Elmet already supplies materials and components to a wide range of defense programs.

Chris Berry, an analyst who focuses on critical minerals, said on his podcast that China dominates the global tungsten supply chain. Meanwhile, the United States has not mined tungsten since 2015.

Ongoing conflicts in Ukraine and Iran have increased pressure on tungsten demand. Berry, however, argued that the metal’s rising price is “due almost exclusively to policy choices in Beijing and Washington.”

“The free flow of tungsten material is for now a thing of the past,” Berry said. He added that those policies have created “two distinct markets” and driven prices rapidly higher.

Government data shows China controls approximately 85% of the world’s tungsten supply and 40% of its molybdenum supply. Molybdenum is a similar material that is often mined in the same areas as tungsten.

Tungsten is primarily used to produce manufacturing tools, but its uses extend well beyond the factory floor. Berry said it is also used to fabricate semiconductors for AI data centers and called it “a must-have” for the defense industry because of its properties.

The metal has the highest melting point of any metal and is roughly as dense as gold. When tungsten is combined with carbon, it forms tungsten carbide, an extremely hard material used in both industrial and military applications.

“There’s no good substitute at scale for most of these applications,” Berry said. He described total tungsten demand as relatively small in absolute terms but highly resistant to changes in price.

Mining additional tungsten represents only one part of the supply challenge. Berry said the United States also needs the capacity to refine and process mined metal into materials that manufacturers can actually use.

“Every mined dollar should be paired with a processing dollar,” he said. Berry identified price protection, defense stockpiling and greater reliance on allied suppliers as other potential remedies for spreading supply chain risk.

According to the War Department announcement, Elmet supports more than 100 defense programs. Those programs include Patriot, Javelin, AEGIS, Trident II and THAAD, along with Virginia class and Columbia class submarines.

Elmet is based in Portland, Maine, and was founded privately in 1929 before going public earlier this year. The company will use $165 million from the investment to upgrade domestic manufacturing operations in Maine, Michigan and Ohio, with the goal of increasing productivity.

The company said in a press release that approximately $150 million will go toward restarting tungsten mining operations in Imlay, Nevada. Another $100 million will fund the establishment of a refining and trading division intended to support access and international partnerships.

Since the agreement, Elmet said it has secured mining operations agreements with Tungsten West in England and the Vietnam based Masan High-Tech Materials Corporation. Those agreements accompany the company’s planned investments in domestic manufacturing, mining, refining and trading capabilities.