The global commodities landscape is approaching a turning point. Export restrictions, geopolitical tensions, and surging demand from the defense sector, the energy transition, and high-tech industries are driving up the prices of strategic metals. Particularly critical raw materials are coming under increasing pressure, while important producing countries are tightening control over their supply chains. Analysts are already talking about a structural revaluation of entire raw materials markets. At the same time, selected producers and trading groups are benefiting from rising prices, new projects, and strategic alliances along the supply chains. For investors, this means that companies that secure access to scarce metals and could play a key role in the new raw materials order are coming into focus.
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Almonty Industries – Analysts euphoric
Various analyst firms are currently outdoing each other with price target adjustments for tungsten producer Almonty Industries (TSX:AII) (NASDAQ:ALM). The reason for this is the expected start of production at the Sangdong mine in South Korea and the exploding price of tungsten. The basic precursor ammonium paratungstate (APT) has risen from USD 940 per metric ton unit (MTU) at the beginning of the year to around USD 2,200 today.
D.A. Davidson raised its price target from USD 18.00 to USD 25.00 and reiterated its “Buy” rating. Cantor Fitzgerald even raised its target price from USD 14.50 to USD 25.80 and also confirmed its “Buy” rating.
Augsburg-based GBC AG also raised its target price to USD 20.48. GBC analysts believe that the global tungsten market is currently undergoing a phase of fundamental restructuring. This is primarily due to export restrictions and production limitations in China, which controls around 80% of global production. As a result, supply has become noticeably scarcer, while at the same time structural demand impulses from defense, aerospace, semiconductors, renewable energy, and high-tech industries are increasing.
The result is a historic price rally for the tungsten precursor APT. Experts view this as a structural revaluation of the entire market. For Almonty Industries, this significantly improves the operating environment. Current production in Panasqueira is already benefiting from higher realized prices. However, the price jump is having an even greater impact on the large Sangdong and Gentung development projects, whose future cash flows could increase significantly.
According to GBC’s assessment, the new price level significantly increases the operational leverage of the projects. With increasing production scaling, the company’s revenue and margin potential could therefore be significantly higher than assumed in earlier, more conservative models.
Rio Tinto – Interesting in the long term
The uncertainties surrounding the escalating conflict in Iran did not spare one of the world’s largest mining companies. Rio Tinto shares lost around 10% of their value week-on-week and are trading close to their 2023 high of EUR 75, which should currently serve as support. However, in the shadow of the market correction, Rio Tinto is reorganizing itself on the basis of numerous projects. With a favorable valuation compared to its peer group and a current dividend yield of 5.29%, this could present a long-term, countercyclical entry opportunity for investors.
The focus is on an investment in a AUD 1.1 billion 50:50 joint venture with the Western Australian government to build a new desalination plant in Dampier. Construction is scheduled to take place in two phases, planned for 2026 and 2027. Once completed, the facility is expected to deliver 8 gigaliters of water per year, reducing pressure on key groundwater reservoirs and ensuring a sustainable water supply for communities and industry. This will help guarantee secure water infrastructure for future mining cycles.
In addition, the new alliance with battery market leader CATL, for which a memorandum of understanding has been signed at this stage, promises drastic cost reductions and decarbonization in mining at the highest level for the electrification of mining equipment. In addition, Rio Tinto aims to supply lithium to the world’s largest battery manufacturer, which would significantly increase its order backlog.
Glencore – A strategic move in uncertain times
The current geopolitical environment is fueling a commodities supercycle, particularly in metals linked to defense and electrification. When defense companies ramp up production, demand for metals, including copper, rises. While demand is growing rapidly due to electromobility, power grids, data centers, and renewable energy, supply is struggling to keep up. According to industry analyses, global demand for copper could nearly double by 2035.
At the same time, new mines are becoming increasingly difficult to develop. Approval procedures often take more than ten years, many deposits have declining ore grades, and political risks are increasing. Major producing countries such as Chile and Peru are also struggling with rising costs and regulatory hurdles.
One of the beneficiaries of this trend is the Swiss commodities group Glencore, one of the most important producers of metals. A special feature of the group is its dual-track business model. On the one hand, it promotes the extraction of raw materials in mines worldwide, and on the other, it negotiates and distributes these globally. This combination allows the company to benefit greatly from price movements on the commodities market.
It also plays on its leading role in the commodities market. Its latest coup in Kazakhstan is a textbook example of smart money. Instead of burdening itself with an expensive complete takeover of ERG, the commodities giant is financing the entry of commodities investor Mutalip into the mining company Eurasian Resources Group (ERG), with around USD 800 million. The investment does not pose any operational risk for Glencore. The advantage is that Glencore secures more influence over its supply chain, as ERG is an important downstream customer for steel descaling and hardening. The deal gives Glencore a strategic advantage in controlling supply in the market. This step is a decisive competitive advantage, especially in times of geopolitical tension.
Tungsten producer Almonty Industries is benefiting from supply shortages and rising prices for strategic metals. Rio Tinto is focusing on long-term demand for battery and industrial metals with new projects and partnerships. Glencore is leveraging its global trading network and strategic investments to secure advantages in the increasingly tense commodities market.
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