Metallic raw materials in a political squeeze
It is not the first time that the situation regarding the future suppliers of strategic metals has proved challenging. 65% of today's global market supply of important high-tech metals comes from politically unstable regions. Western industries are thus under pressure to get secure jurisdictions into a medium-term supply position. Many states today know that this goal can only be achieved through joint and concerted efforts because the Western world's dependence on Beijing and Moscow remains a top issue for the mining industry and its customers.
South Korea is currently the largest per capita consumer of tungsten. Megatrends such as e-mobility, artificial intelligence, and metaverse play a crucial role for the Asian country as a counterpart to regionally dominant China. This is because tungsten is becoming increasingly important in the manufacture of electric vehicle batteries, as it can significantly increase energy density. Niobium-tungsten oxide batteries are already on the industry's roadmap for the future. They have significantly lower charging times and offer a higher power density. Asian manufacturers such as BYD also promise more endurance and safety by increasing the tungsten content in the coveted drive batteries. What is often forgotten in times of peace is back on the agenda in times of war: armaments contain a large amount of the hardening metal tungsten. It strengthens the outer walls of hollow bodies or increases the melting point of alloys. Thanks to the backing of some governments and large industrial companies looking for a reliable source of the rare metal, Almonty Industries is well positioned in the strategic resources market.
A bombshell from China
Until mid-January, there was little activity surrounding Almonty Industries Inc. (WKN: A1JSSD | ISIN: CA0203981034 | Ticker symbol: ALI). The price hovered around the CAD 1 mark for a long time, with moderate turnover. But then, a series of significant company announcements followed. Investors should pay particular attention to the verbal confrontations between the US and China since Donald Trump took office. With the US imposing trade tariffs, China's export restrictions on strategic metals have also come into the geopolitical spotlight and become more apparent to market participants. In response to safeguarding US interests, Almonty announced on January 25 that it would relocate its headquarters from Canada to the US. In addition to direct access to the purchasing industry, this move also opens up the vast world of US-oriented funds, which dominate global prices, especially in the high-tech sector. An appropriate listing in the US now with a market capitalization of more than USD 400 million is on the horizon.
Purchase contracts are coming into focus
In addition to tungsten, the now-focused Sangdong mine in South Korea also has significant molybdenum deposits. Until recently, Almonty had not really considered the metal in its internal calculations until 2025. Then came the surprising news that it had signed a billion-dollar offtake agreement with a SpaceX supplier. From 2026, the Company plans to supply up to 5,600 tons of molybdenum at a minimum price of USD 19 per pound – a guaranteed source of income of at least USD 234 million per year, regardless of market price fluctuations. The partner is SeAH M&S, the largest processor of molybdenum products in South Korea and operator of the second-largest molybdenum oxide smelter in the world.
Production starts in 2026, SpaceX strikes.
The Sangdong Molybdenum Project, being developed by Almonty Korea Moly Corp. (AKMC), is already fully permitted and expected to commence production in late 2026, with a mine life estimated at 60 years based on historical data from the Korean government. SeAH M&S, for its part, is building a USD 110 million metal and manufacturing facility in Temple, Texas, that will supply metal products for Space Exploration Technologies Corp. (SpaceX) and for the US defense and civilian space industries.
The offtake agreement with the Austrian Plansee Group also provides an important basis for future tungsten production. A minimum price of USD 235 per ton is assumed here, with the price having reached a historic high of over USD 500. Plansee is one of the world's leading tungsten suppliers, with around 11,000 employees and production facilities in some 50 countries. The Austrian company's commitment underscores the shortfall in global markets for this critical metal.
Analysts are excited
In the German magazine Hot Stock Report, CEO Lewis Black commented: "This is great, tungsten and molybdenum are now part of the US and China's struggle for raw materials." Analysts see the escalations of recent weeks as a clear indication that the battle for essential materials has likely begun. These hardening metals are needed particularly in the defense sector. With the highest melting points in the metal universe, tungsten is particularly relevant in ammunition and armor. US President Donald Trump repeatedly called on NATO to significantly increase its military spending if the US is to remain in the alliance in the long term. The pressure is on!
Sphene Capital analyst Peter Thilo Hasler has updated his calculations again and sees considerable potential: He raised his price target for Almonty from CAD 3.21 to CAD 5.20 source: Sphene Capital. The analyst from Munich expects significant revenues of over CAD 192 million and an EBIT of CAD 69.4 million as early as the start of operations in 2026. On the bottom line, a net profit of CAD 46.8 million or CAD 0.19 per share should be achievable. Based on today's share price of around CAD 2.15, the stock would currently be valued at a P/E ratio of 11.3 in 2026. Given the high market dynamics, this ratio can sometimes exceed 30.
Valuation ratios show explosive potential
Tungsten, molybdenum, and rare earth elements are among the most critical materials. The extent to which the global scarcity situation can impact the valuation of companies is demonstrated by the example of MP Materials Corp from the USA. With the California Mountain Pass project, the Company owns the largest rare earth property in the Western world. Last year, 2024, revenues were estimated at around USD 192 million, up from USD 73 million in 2019. Analysts expect revenues on the LSEG platform to increase to around USD 750 million by 2027. MP Materials is currently valued at just under USD 4 billion, or around 10 times Almonty Industries. Naturally, the revenues of companies will develop differently as the availability of metals is defined by the global market. However, Almonty Industries' starting position shows a significantly lower valuation compared to its US competitor. This is likely also due to the Canadian stock exchange, which was unable to deliver high premiums for listed junior companies in 2024. On the US stock exchanges, the urgency of securing the supply chain is much more strongly priced in. Relocating to the neighboring country will therefore benefit the producer Almonty greatly.
At the end of last week, CEO Lewis appeared in front of Stockhouse's camera. Here you can access the video interview with host Lyndsay Malchuk.
A takeover rumor goes viral
We are dealing with a tight market in the tungsten and molybdenum business. Larger interested parties who have not yet made an appearance can quickly appear on the scene. According to a LinkedIn post, market observers have identified Global Tungsten & Powders Corp. (GTP), a private Austrian company Plansee Group subsidiary, as a potential buyer. With a stake of 13.97% or 38.15 million shares, the investment already has strategic dimensions. In the past few days, GTP has published the following translated message: "In response to possible new import tariffs, GTP reaffirms its commitment to providing our customers with uninterrupted service and a continuous supply of tungsten products. Your tungsten supplier in the USA. Think tungsten. Think GTP." It may sound like marketing, but it could also indicate greater intentions. According to the LSEG platform, Almonty is GTP's only stake in a publicly listed company. GTP has stuck its neck out with its statement on the tungsten market – an indication of its ambitious plans in the event of a bidding war. German Rohstoff AG also still owns over 10% of Almonty and could play a role in possible speculation. The major shareholders will certainly demand a corresponding premium for their long wait until the mine restart in South Korea. We will stay on the ball here.
Conclusion: On the ascent to revaluation
The 24-month chart of the Almonty share reflects its recent history. The producer has been in the international spotlight for several weeks now, as indicated by the explosive trading volumes. The dual-listing in Australia has opened up extensive refinancing opportunities for the Company, and it is also receiving significant attention in the largest trading market, Germany (especially on Tradegate). Perhaps a US listing will be added in the coming months.
CEO Lewis Black has had to ask for patience in recent months, as approval processes in mining can sometimes take longer than expected. But now the time has come: tungsten will be available from 2025, and molybdenum will also be supplied from South Korea starting in 2026. China's dominance in this area will quickly be put into perspective. In the upcoming re-rating, the US market and comparable companies such as MP Materials should not be overlooked. With the recent doubling of the share price, the story is, in our opinion, only just beginning!
The update is based on our initial Report 12/2021.
