Tungsten Critical for Defense, Semiconductors, and More
Tungsten has a high density and, at 3,422 degrees Celsius, the highest melting point of all elements. This hard heavy metal is vital in chemistry, for the production of armor-piercing ammunition, semiconductors, aerospace technology, tools, and so much more.
For example, tungsten is one of the critical industrial metals required for the production of the Tomahawk cruise missile. According to the “Washington Post,” government officials have confirmed that US stockpiles are at an alarming level due to the war against Iran. More than 850 Tomahawks were fired within four weeks. Tungsten is also used in Patriot missiles due to its extremely high density, hardness, and heat resistance.
And it is not just the defense industry that is driving increased demand for tungsten. The semiconductor industry, which is operating at capacity due to the AI boom, also needs this critical metal. As we have previously reported, Japanese producers of tungsten hexafluoride (WF₆) appear to be having trouble obtaining enough tungsten for further processing. Yet chip companies like Samsung and SK Hynix rely on WF₆.
China Shifts from Exporter to Importer
The issues in Japan also align with another trend that many investors have not yet picked up on: China, the world’s largest producer, is increasingly becoming a net importer of tungsten, at least on the raw materials side. Although the country accounts for around 80% of global production, tungsten imports are rising significantly. This is confirmed, for example, by data from the Observatory of Economic Complexity. The rationale is said to be a strategic realignment. China is strategically securing raw materials on the global market to supply its own industry, from defense to high-tech, while keeping value creation within the country. The aim is to import raw materials and export processed products. This has noticeable consequences for the global market, as a new, structural source of demand is emerging, created, of all things, by the dominant player itself, on top of the already tight supply situation.
The tight supply situation is also reflected in the price. A Metric Ton Unit (MTU), equivalent to 10 kg, of ammonium paratungstate now costs over USD 3,000 on the Rotterdam trading platform. At the beginning of this year, the price was only around USD 900 per MTU, and in mid-2023, it was less than USD 300.
Earnings of CAD 3.21 Per Share Expected in 2027
Against this backdrop, it comes as no surprise that Almonty shares, listed on the Nasdaq, are among the absolute high-flyers on the stock market this year with a performance of more than 150%. Importantly, the fundamental performance is equally impressive. On the one hand, the price of tungsten has risen even faster than the stock price. On the other hand, the company’s revenue and earnings are expected to grow rapidly in the coming years. This is because Almonty is poised to become the largest tungsten producer outside of China this year and likely the most profitable globally as well.
Analysts at Cantor Fitzgerald expect Almonty’s annual production to rise from the current level of around 58,000 metric tons per year to 800,000 metric tons by 2028. The expansion of the mine in Portugal, the ramp-up of the Sangdong mine in South Korea, and the development of the US mine in Montana are expected to contribute to this.
Analysts believe the tungsten producer could already see its revenue increase tenfold to CAD 472.3 million this year. Next year, revenue is expected to more than double again to CAD 1.2 billion. Earnings per share are then projected to reach CAD 3.21.
Almonty shares, which are also heavily traded in Germany, are currently trading at CAD 31.90.
Conclusion: 2027 P/E Ratio Appears Attractive
With a 2027 P/E ratio of 10, Almonty shares continue to look promising. Especially since analysts’ valuation models for Almonty are traditionally based on a significantly lower tungsten price. There is no indication that the fundamental conditions will change for the worse for Almonty.
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