EQ Resources secures $124m in long-term tungsten offtake agreements amid market disruptions

EQ Resources Limited (ASX: EQR) has successfully secured five long-term offtake agreements for its tungsten concentrate, covering production from its Australia and Spain operations over the next 24 months. The agreements, which represent a total estimated value of $124 million, reinforce the company’s role as a key Western supplier amid rising global demand and recent supply constraints caused by China’s export restrictions.

The newly signed contracts will account for 470 containers of tungsten concentrate, with each unit carrying 20 metric tonnes of 50% WO3 concentrate. This strategic move not only ensures stable revenue streams but also strengthens EQ Resources’ market position as major economies seek to diversify their critical minerals supply chains.

Why Is Tungsten Supply Under Pressure?

Tungsten is a critical mineral widely used in industrial applications, from aerospace manufacturing and electronics to medical technologies and military defense. However, global supply chains have been increasingly strained, particularly following China’s decision to restrict tungsten exports in February 2025. Given that China controls approximately 80% of the world’s tungsten refining capacity, this move has created significant concerns across global markets.

China’s policy shift has led to a 13% increase in the Fastmarkets APT Mid Price over the past 12 months, with steady price rises following the introduction of strict export controls. In response, Western consumers have turned to alternative suppliers such as EQ Resources, which is now positioned as a key tungsten concentrate supplier to North America, Europe, and Asia.

Who Are EQ Resources’ Buyers?

The new offtake agreements have been signed with leading international tungsten consumers, all of whom are established top-tier producers in their respective markets. These counterparties manufacture products such as Ammonium Paratungstate (APT), tungsten oxide, and tungsten carbide—materials that are now subject to Chinese export restrictions. While the exact identities of the buyers remain undisclosed due to commercial sensitivity, EQ Resources confirmed that approximately 25% of its production will be shipped to Europe, 25% to North America, and the remaining supply allocated to Asian markets.

These agreements include a standard pricing mechanism linked to Fastmarkets APT pricing, ensuring market-based valuation and predictable revenue streams. The contracts also incorporate advance payment components, with final milestone payments expected to be completed by the end of Q2 2025.

How Does This Impact EQ Resources’ Financial Outlook?

For EQ Resources, these offtake agreements represent a significant step toward revenue stability and operational growth. Investors and lenders in the critical minerals sector prioritize companies with secured revenue streams, making these contracts a valuable asset in securing future financing and expansion opportunities.

Despite this positive development, EQ Resources’ stock (ASX: EQR) has seen short-term fluctuations, trading at AUD 0.04 as of March 14, 2025, reflecting a 6.52% decline from the previous week. However, the stock remains 68% above its 52-week low of AUD 0.025, recorded in early February. Over the past year, EQ Resources’ stock has declined by 17.65%, although analysts suggest a potential upside of 188.89%, with some forecasting a target price of AUD 0.13.

From a financial perspective, EQ Resources has reported a negative return on equity (ROE) of -77.50%, raising concerns about profitability and operational efficiency. The company has also not issued dividends, a factor that may impact its attractiveness to income-focused investors. However, the long-term revenue certainty provided by these agreements could improve financial performance over time, positioning EQ Resources for potential stock appreciation.

What Role Does EQ Resources’ Vietnam Acquisition Play?

In addition to securing these long-term contracts, EQ Resources is working toward acquiring Tungsten Metals Group, a ferrotungsten smelter in Vietnam. This proposed acquisition aligns with the company’s broader strategy to expand its downstream processing capabilities, allowing it to add value to its tungsten concentrate rather than relying solely on raw material sales.

By integrating ferrotungsten processing into its operations, EQ Resources could strengthen its market position, particularly as demand for Western-sourced tungsten continues to grow. The acquisition also aligns with global trends in the critical minerals industry, where major players are seeking to diversify refining capabilities outside of China.

What Does This Mean for Investors?

The global tungsten market is undergoing significant shifts, and EQ Resources has positioned itself as a key player amid ongoing supply constraints. The new offtake agreements provide financial stability and revenue predictability, which are crucial for attracting institutional investors and strategic partners.

However, investors should remain cautious about short-term financial indicators, particularly the company’s negative ROE and stock volatility. While the long-term supply contracts mitigate revenue risks, the company’s profitability and cash flow improvements will depend on how efficiently it executes its production and downstream processing strategies.

For now, analysts suggest a hold position on EQ Resources stock, as the company navigates its expansion plans and capitalizes on rising tungsten prices. The completion of its Vietnam acquisition, along with its ability to deliver on offtake commitments, will be key factors in determining its future stock performance and market valuation.

The Bigger Picture: Tungsten’s Strategic Importance

Beyond EQ Resources, the broader critical minerals sector is experiencing increased geopolitical tensions and supply chain disruptions. As Western nations seek to reduce reliance on China for key raw materials, companies like EQ Resources are becoming increasingly strategic assets in global supply chains.

With tungsten demand rising—driven by sectors such as renewable energy, military technology, and high-performance manufacturing—suppliers outside of China are expected to see continued interest from industrial buyers. EQ Resources’ latest contracts signal that the company is well-positioned to capitalize on these trends, providing long-term value for investors and stakeholders alike.