After tungsten, is this the next raw material bottleneck? thyssenkrupp, Pasinex Resources, and Mercedes-Benz under review!

thyssenkrupp – Modernization and marine orders

Germany's largest steel manufacturer, thyssenkrupp Steel, has completed a major modernization project at its Duisburg site after around two years of construction. At the heart of the project is a new high-tech complex consisting of a state-of-the-art continuous casting line, a completely renovated hot strip mill, and fully automated slab logistics. The investment volume of around EUR 800 million highlights the strategic importance of the project. The facilities not only enable more efficient production of premium steels for electromobility and renewable energies, but also improved surface qualities – for example, through optimized zinc coating processes for the automotive sector.

At the same time, the spin-off of the profitable Marine division, TKMS, is progressing. The Supervisory Board gave the green light for the planned partial spin-off and subsequent listing on the stock exchange. A service contract worth around EUR 800 million recently awarded by the German Armed Forces for the modernization of six submarines underscores the business potential and role as a systemically important partner. The German government is securing future rights of influence, for example, in strategically relevant share sales, in order to safeguard security interests. TKMS benefits from a record order backlog and explicit location guarantees in Germany.

While the navy is focusing on independence, automotive supplier thyssenkrupp Automotive Technology is also restructuring. Starting in October, the segment will bundle its activities into four clearly defined business units to become more efficient, customer-focused, and capital market-ready in the long term. At the same time, the Steel division is facing difficult adjustments. The new collective agreement for the steel division provides for the elimination of around 11,000 jobs and an average salary reduction of 8%. The aim is to ensure long-term survival by cutting costs and focusing on competitive core capacities. thyssenkrupp shares are currently trading at EUR 11.08.

Pasinex Resources – Zinc specialist scores with premium ores

Pasinex offers an unusual approach for zinc investors who think outside the box of mass production. Instead of volume, the explorer and producer is focusing on extremely high-grade deposits in Turkey with zinc contents of 25-50%. This is many times the industry average. It makes economic sense, as mining costs of USD 200-300 per tonne and raw material values of up to USD 1,300/t with a zinc content of 50% result in operating margins of 30-50%. Thanks to direct shipping from the ore and near-surface deposits, the Company achieves positive cash flow in months, not years. More than a decade of experience in Turkish operations and over £160 million of zinc sold form the backbone for the next steps.

Pasinex leverages Turkey's geological diversity and established infrastructure, including asphalt roads, electricity, and ports, to support its projects. Permits have been obtained, and community work such as school projects ensures acceptance among the population. The Company is currently rolling out high-grade small deposits in a targeted manner. The flagship Pinargozu project, with ongoing mining of up to 50% zinc content, is complemented by the acquisition of Sarikaya. Here, already identified ore bodies with zinc grades of 30-50% will enable production to start within months. A third project, Akkay, is in a waiting position, as is the US project Gunman in Nevada.

The next steps are clear. Short-term monetization of small high-grade ore bodies will finance deep exploration. Sarikaya is expected to generate cash immediately, while a deeper tunnel at Pinargozu will open up new zones. Capital is needed for scaling up. A USD 7 million financing round is intended to complete the acquisition of Sarikaya and advance drilling. Management holds over 25% of the shares and therefore has a vested interest in further growth. Pasinex recently strengthened its balance sheet substantially by converting CAD 2.16 million in debt into equity. In addition, the Company has outstanding receivables of USD 37.7 million from its joint venture partner, Akmetal. There are, therefore, several catalysts for a share price increase. A court victory, as well as the start of production at Sarikaya and Pinargozu, could drive the share price up from its current level of CAD 0.065.

Mercedes-Benz – Between innovation, uncertainty, and strong dividends

Zinc plays a central role at Mercedes-Benz. It is used for corrosion protection, zinc phosphate coatings for paint adhesion, and in die-cast alloys for components such as door locks and transmission housings. Around 10% of global zinc consumption is accounted for by the automotive industry, with virtually all major manufacturers relying on this material. Despite efforts in the recycling sector, zinc remains irreplaceable due to its properties. This is a fact that investors should keep in mind when assessing the supply chain.

In the second quarter, Mercedes-Benz recorded a 9% decline in global deliveries to 547,100 vehicles. Battery-electric models were particularly affected, with sales falling by 18%. The leading causes were new trade tariffs, a volatile market environment, and model changes. While demand remained stable in the US and Germany, the Chinese market weakened significantly and contributed significantly to the overall decline. Margins are also under pressure as cost programs have not been able to fully offset the negative mix effects.

Mercedes-Benz is focusing on a model offensive to overcome the challenges. The new CLA and the upcoming electric GLC are expected to provide impetus, while battery production in Kamenz will ensure fast charging times and sustainability. A closed recycling concept is planned from 2026. With a dividend yield of over 8% and solid cash reserves, the Company aims to strengthen confidence. Risks such as dependence on the Chinese market and trade policy remain. This is also reflected in the current share price of EUR 52.26.

Given geopolitical risks relating to raw materials, it is clear that alternatives are essential. thyssenkrupp is setting an important course for the future with an EUR 800 million modernization program in its steel segment and the planned IPO of its profitable Marine division, TKMS. Pasinex Resources scores as a zinc specialist with high-grade deposits in Turkey that enable short-term monetization and scaling. Despite its dependence on zinc for corrosion protection, Mercedes-Benz is struggling with declining sales in China and electric models, but is focusing on new models and a dividend yield of around 8%.