By JAMES FINK
jfink@bizjournals.com | 716-541-1611

Dramatically rising costs for raw product are fueling a plan by an affiliate of Buffalo Tungsten Inc. to start a $19 million
expansion project.

Buffalo Tungsten, through its Niagara Refining LLC, wants to invest the money in new machinery and related renovations at its Depew plant. That would result in the hiring of at least 48 additional employees in coming months. At $19 million, it represents the largest private investment by Buffalo Tungsten.

New machinery will help the company refine its own tungsten scrap and "concentrate" into new raw materials that will be incorporated into its own product lines. Tungsten and tungsten carbide are used in a number of industrial applications, including supplying filament for light bulbs, developing heating elements and for mining industry equipment. Tungsten carbide has a hardness that is nearly equal to that of diamonds.

"Strategically, this makes sense for us," said Roger Showalter, president of Niagara Refining. "This could be a great project for the community."

A driving force behind the project is the rapidly increasing prices that Chinese manufacturers are charging for raw tungsten product. Costs have increased by more than 150 percent and supplies are limited.

"We need to be independent of China when it comes to producing our own raw material," Showalter said.

Niagara Refining, with new machines and technology, will make product for Buffalo Tungsten.

"It will pay for itself," he said. "The results will speak for themselves, probably by the end of next year."

He said he hopes to have all the machinery ordered and installed by the second quarter of 2012. The company is working with the Lancaster Industrial Development Agency on an incentive package for the project. Agency directors likely will vote this month on an incentive package that's still being crafted.

Robert Giza, Lancaster town supervisor and IDA chairman, said he supports the Niagara Refining plan. He and other officials from Lancaster and Depew have met with Showalter to discuss the project.

"Anything that talks about creating new, good jobs, I'm for," Giza said. "This goes beyond the jobs they will be creating. There will also be construction-industry jobs related to installing the new equipment."

According to Showalter, the new machinery will occupy about 100,000 square feet of Buffalo Tungsten's 144,000-square-foot plant on Main Street in the Village of Depew. Once up and running, Niagara Refining will have almost as many workers as Buffalo Tungsten.

"It's a sign of our slow but steady growth," he said.

Buffalo Tungsten was formed in 1987 and is considered a leading independent manufacturer of tungsten powder products. Tungsten metal powders and carbide powders are the primary products, although the company does have a niche line of specialized powders and metals.