Stock market turmoil on Friday: Donald Trump once again threatens to wield the tariff club. This came in response to China’s announcement to tighten export controls on rare earths. Yet, there are also winners in the raw materials battle between the two superpowers. In recent months, the US government has invested in companies such as MP Materials, focusing so far on rare earths and lithium. Will tungsten be next? This critical metal has not been mined in the US for a long time, and Almonty would be the logical partner to change that. Notably, while US stocks lost ground, in some cases heavily, on Friday, Almonty shares recovered significantly from their intraday lows.
This article is being disseminated on behalf of Apaton Finance GmbH, a third-party issuer and is intended for informational purposes only.
Raw materials war between China and the US
Donald Trump’s latest tariff threat against China has once again turned the world’s attention to a long-simmering conflict between the superpowers: the battle for raw materials. Beijing dominates the global processing of key raw materials such as tungsten, rare earths, graphite, and lithium – materials that are indispensable for batteries, microchips, armaments, and the energy transition. Export restrictions are being used as a means of pressure. Washington is responding with massive support programs to expand its own supply chains. The raw materials conflict has thus long since become a geopolitical power struggle for technological sovereignty and economic security.
In order to gain access to critical raw materials and, as far as possible, to establish production in the US, the US government has acquired stakes in numerous companies in recent months. MP Materials was the first in July. The US Department of Defense invested around USD 400 million. MP Materials owns the only major rare earths production facility in the US. Production is set to be significantly expanded in the coming years. Similar investments have also been reported in the lithium sector in recent weeks. At least one key raw material is still missing: tungsten. This extremely hard material is indispensable not only in defense and aerospace. And, incredibly, the US is 100% dependent on imports.
Almonty Industries: Speculation about US entry is justified
First things first: the possibility of the US government acquiring a stake in Almonty Industries (TSX:AII) remains pure speculation. Nevertheless, several factors make such a move appear entirely plausible. First, there is the urgent demand in the US, coupled with a lack of domestic production and the fact that China controls more than 80% of the tungsten market. Mining tungsten is complex due to the metal’s extreme hardness – an area where Almonty has proven expertise. The Company already operates a mine in Portugal and, in South Korea, has developed the Sangdong mine, the largest tungsten mine outside China, which is now entering production. Almonty CEO Lewis Black already announced that production volumes from South Korea would mainly go to the US in the future. Incidentally, the Company is currently relocating its headquarters from Canada to the US.
In an interview with Bloomberg a few weeks ago, Black also announced that Almonty was reviewing takeover candidates in the US in order to establish a local production site. These are likely to be explorers who could really use Almonty’s support in setting up production. The US government could come into play and get involved in order to finance the ramp-up of production. It has done so in comparable cases involving lithium in recent weeks. The final piece of the puzzle is the share price. In recent weeks, Almonty’s share price has risen by over 50%. It would have been understandable if investors had used Friday’s stock market turmoil to take profits, causing the stock to fall significantly. However, this was not the case. The share price recovered noticeably from its daily low and closed trading down only 1%.
By the way: MP Materials has impressively demonstrated the significance that the Trump administration’s involvement can have on a company and its shares. Before the government’s entry, the share price stood at around EUR 26 at the beginning of July. On Friday, it was trading at over USD 78.
Bayer: Goldman Sachs recommends buying
Conservative stocks are indirect winners of the Trump storm. Bayer is one of them. Goldman Sachs recently recommended buying the Leverkusen-based company’s shares again. Analysts are conservative in their earnings estimates for the third quarter. They expect EBIT to be 11% lower than the consensus and earnings per share to be as much as 45% lower.
Due to seasonality, they expect the agricultural business to be relatively weak. In addition, overall costs are likely to be higher than estimated by fellow analysts. Nevertheless, Goldman analysts see the fair value of Bayer shares at EUR 34.50. The shares are currently trading at around EUR 28. According to marketscreener.com, 12 out of 19 analysts currently recommend “Holding” Bayer shares. Another 7 recommend “Buying”. The highest price target is EUR 39.
This year, Bayer shares are one of the positive surprises. Despite the ongoing glyphosate litigation, the stock has gained almost 45%.
Almonty shares showed impressive relative strength on Friday against the backdrop of price gains in recent weeks. An entry by the US government is pure speculation, but it would make sense and would likely push the price above the EUR 10 mark. But even without this speculation, the news flow for the tungsten play is likely to remain positive. MP Materials shares have remained at a high level following the US government’s entry. The recent dispute between the two superpowers highlights how crucial rare earths will be for the US. In contrast, buying Bayer shares does not seem compelling at the moment.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as “Relevant Persons”) may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a “Transaction”). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
For this reason, there is a concrete conflict of interest.
The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.
Risk notice
Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.
The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.
The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.
Stockhouse does not provide investment advice or recommendations. All investment decisions should be made based on your own research and consultation with a registered investment professional. The issuer is solely responsible for the accuracy of the information contained herein. For full disclaimer information, please click here.
