Pentagon acquires near-20% stake in US tungsten producer in $450M deal to cut China dependence

The US Department of Defense is putting $450 million into Elmet Group, the country’s only fully integrated tungsten and molybdenum producer, in a deal that would give the federal government up to 19.9% ownership of the company. The goal is straightforward: stop relying on China for a metal that’s essential to everything from armor-piercing ammunition to aerospace components.

China controls roughly 85% of the global tungsten market. For a material the military literally cannot function without, that’s the kind of supply chain concentration that keeps Pentagon planners up at night.

How the deal is structured

The investment is built around redeemable preferred equity and warrants, a structure that gives the government significant upside without requiring an outright acquisition. It also comes with a seat at the table: the DoD will be able to appoint one independent director to Elmet’s board.

Of the $450 million, more than $165 million is earmarked for modernizing Elmet’s existing facilities in Maine, Michigan, and Ohio. Another $150 million or so will flow into a joint venture tied to the Springer Tungsten Complex in Nevada, which would become North America’s only ammonium paratungstate facility. APT is the intermediate chemical compound used to produce tungsten metal and carbide powders, meaning control of APT production is effectively control of the entire downstream supply chain.

On top of the equity investment, the Defense Logistics Agency awarded Elmet an indefinite-delivery/indefinite-quantity contract with a ceiling of $2 billion and a minimum commitment of $150 million. That contract is designed to replenish the National Defense Stockpile, the government’s strategic reserve of materials deemed critical to national security.

Investors noticed. Elmet’s shares, which trade on the Nasdaq under the ticker ELMT, surged as much as 55% intraday following the announcement, with trading volume spiking well above normal levels.

Why tungsten, why now

Tungsten has the highest melting point of any metal, roughly 3,422 degrees Celsius. That property makes it irreplaceable in military applications like kinetic energy penetrators, rocket nozzles, and radiation shielding. It’s also critical for industrial cutting tools and semiconductor manufacturing equipment.

New US defense procurement regulations, set to take effect on January 1, 2027, will restrict tungsten sourcing from certain countries. That regulatory shift turns what was previously a strategic preference for domestic supply into a hard requirement, and companies like Elmet become the only compliant option.

The Pentagon’s investment is projected to create 1,200 jobs across domestic manufacturing and mining operations. Building an APT facility in Nevada would close a critical gap in the North American supply chain, eliminating the need to ship raw tungsten concentrate overseas for processing before bringing it back to the US for end-use applications.

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