The New Reality – Here to Stay
Commodity markets are known to be cyclical. However, what has occurred in certain segments over the past few quarters is a profound structural shift. China’s dominance, further reinforced by export restrictions, has painfully rubbed salt into the wound of Western industrial nations. Supply chains are at risk, and nearly all countries have failed to sufficiently develop alternative sources of raw materials originating in the West.
At the beginning of the year, the US government announced the establishment of a strategic reserve for rare earths and other critical raw materials to support the national technology industry. This reflects the new reality in the commodities sector. Governments and nations are establishing themselves as a key investor group. They are willing to pay high, strategically motivated prices to ensure supply security.
In addition, the US government has banned the import of critical raw materials from China starting in 2027. This further widens the gap between demand and availability. But it is not only the defense industry that has an enormous demand for tungsten; the chip industry also relies on it. Massive supply bottlenecks are looming this year for tungsten hexafluoride, an essential process gas in chip manufacturing.
Incredible Margins and What Analysts Make of Them
All these developments play into Almonty Industries’ hands immensely. The company recently reached full production capacity during Phase 1 of its flagship Sangdong mine in South Korea. This decisive milestone means that 640,000 tons of tungsten ore are now being processed annually. This ultimately yields 2,300 metric tons of tungsten concentrate. The second expansion phase, with significantly higher production, is expected to begin in late 2027. By then, the mine, which has an extremely long lifespan of 45 years, is expected to supply around 40% of global demand outside of China.
An even more impressive view is revealed when looking at the details. Sangdong was designed to achieve attractive margins even in a low-price environment of around USD 350 per metric ton unit (MTU). Currently, the price stands at over USD 3,200 per MTU. Analysts continue to base their price targets largely on a range of USD 1,000 to USD 1,500 per MTU, which is a fraction of the current price.
Even at this price level, experts expect the company to achieve net margins of 60% at full production. This phenomenal level is likely to be dwarfed by the significantly higher current prices. It therefore stands to reason that an adjustment of tungsten prices toward current levels should lead to sharply rising cash flows and profits, and consequently to higher price targets. Furthermore, the strategic premium of Almonty’s tungsten production, driven by fundamentally changed market conditions and significant geopolitical importance, has not yet been adequately factored in.
USA – The Trump Card
As another trump card, CEO and major shareholder Lewis Black has skillfully played the US card in multiple respects. At the end of last year, Almonty acquired an advanced tungsten project in the US state of Montana, which is scheduled to begin production as early as the second half of 2026. With US production, the company is positioning itself as a preferred supplier to meet the enormous demand from the United States.
The Nasdaq listing was also significant. This made the stock investable for a broader institutional investor base. As a result, Almonty was able to carry out a substantial capital increase at the end of 2025, and demand for the shares increased significantly. With a cash balance of nearly CAD 270 million at the turn of the year, Almonty is well-positioned to handle the tremendous growth.
Most recently, the company relocated its headquarters to the US. This is more than a mere administrative formality. As a result, its shares become investable for a broader group of investors, and access to credit and subsidies is significantly facilitated. The stock has rightly rewarded this move.
There are several compelling reasons in favor of investing in Almonty Industries. Most notably, the new all-time highs in the critical raw material tungsten stand out. The supply shortage is expected to persist due to strong demand combined with insufficient supply. With rising production, expected in the foreseeable future to account for around 40% of tungsten supply outside China, significant margins appear achievable. However, current analyst estimates have so far failed to reflect this development. Similarly, a strategic premium is often overlooked given the company’s geopolitical significance, US location, and future production in the United States. It is only a matter of time before this changes. As a result, analysts and market participants are likely to revise their forecasts and price targets upward. For forward-looking investors, this phase may therefore present attractive return opportunities.
Conflict of interest
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