October 13th, 2022 | 13:38 CEST
Almonty Industries, Mercedes-Benz, Amazon - Strong raw materials for profitable cloud technology
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
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Almonty Industries focuses on geopolitically secure commodity extraction
China and Russia are among the economic powers with the largest raw material resources. Given the worsening geopolitical situation, investors need to allocate their raw material assets more prudently.
One alternative is offered by the Company Almonty Industries, whose management under CEO Lewis Black is pursuing ambitious goals. They want to become the largest tungsten supplier outside China.
Tungsten has the highest melting temperature among all metallic elements. Therefore, tungsten is a very good conductor of heat and electricity. Due to its high density, the element is also widely used in military defense. Tungsten has transformed from an industrial metal to a technology metal used for coating anodes and cathodes, among other applications. The metal is indispensable for battery and power generators. Primary customers include the automotive industry, industrial power generation companies, and aerospace and defense industries. In addition, tungsten is heavily used in the semiconductor industry.
CEO Black describes his corporate strategy in simple terms "We only focus on countries where we can sleep well at night. Also, our customers demand complete transparency for the nature of their business." South Korea is one of the world's leading economies. That is precisely where Almonty Industries' largest tungsten project is underway: the reopening of the Sandong mine, with high-grade deposits of the valuable metal.
On the industrial side, Almonty is backed by a 15-year offtake agreement with the billion-dollar Plansee Group. This contract guarantees a cash flow of USD 590 million. In addition, Germany's state-owned KfW IPEX-Bank has provided a senior project finance loan to fund 70% of capital expenditures throughout the project's development.
With backing from other major companies looking for a reliable source of the metal, Almonty Industries is well positioned.
Mercedes-Benz strengthens cloud business for more efficient logistics
Mercedes-Benz Group experienced the devastating impact of the Corona pandemic on logistics and supply chains through shortages of semiconductors, lithium and nickel. Relying solely on the major automotive suppliers for purchasing creates too much risk for the Group. Moreover, regionalization of the supply chains is the wrong goal, CEO Källenius emphasized to the "Financial Times" (FT). He says that global supply chains have been built up over the years and ensure market efficiency.
In order to maintain an overview and better cushion future bottlenecks ahead of time, the Stuttgart-based company is now relying on US-based Microsoft cloud technology. Mercedes-Benz's new MO360 Data Platform connects the Company's approximately 30 global passenger car plants with the cloud. This will improve predictability along digital production and supply chain processes.
Jörg Burzer, Member of the Board of Management of Mercedes-Benz Group AG, responsible for Production and Supply Chain Management, explains: "The new partnership between Microsoft and Mercedes-Benz will make our global production network smarter, more sustainable and more resilient in times of geopolitical and macroeconomic challenges. The ability to predict and avoid problems in production and logistics will become a key competitive advantage as we move into the all-electric age."
Let's hope that Mercedes-Benz's critical infrastructure is better positioned than Deutsche Bahn's. The latter recently had to shut down all traffic in northern Germany for several hours due to an act of sabotage on two cables.
Amazon - Profits in the cloud, losses in e-commerce
Amazon is one of the world's largest cloud providers. The Seattle-based company has a market share of 38.9%, giving it the lead over competitor Microsoft. According to Gartner, Microsoft had a market share of 21.1% in 2021.
The cloud service Amazon Web Services (AWS) is the Company's real cash cow. In the first half of 2022 alone, Amazon drove USD 12.2 billion in operating profit. In stark contrast, revenue from its e-commerce division is down, with revenue falling 1.7% YOY to USD 113 billion in the first half of the year.
Amazon is doing everything it can to shape its technology to meet customer needs. For example, the Company is launching a new series of specialized computer chips geared toward Deep Learning training for common machine learning models while also being able to implement what is learned faster than traditional processors. The "Trn1 Series" is based on an in-house collection of hardware and software innovations developed by AWS. The processors are specifically designed to optimize high single-customer data volumes, private networks and fast local storage.
To offset e-commerce losing business, Amazon is unceremoniously reaching into its marketing bag of tricks and launching a two-day Prime shopping day in the US, Canada and 13 other European countries. But the AWS cloud division remains Amazon's all-time high cash cow.
The possibilities of networked cloud technology for Amazon's machine learning from customer datasets seem almost limitless. The symbiotic relationship enables the market leader to provide its customers with even better technology for rapidly scalable businesses. Automotive groups such as Mercedes-Benz are also stepping up the expansion of their cloud solutions. Supply chain disruptions have impacted sales to such an extent that the Company is now working with joint venture partner Microsoft to respond to potential bottlenecks at an early stage. In order to further expand these technologies, large resources of metals such as tungsten are needed. To ensure that investors and customers can sleep well, Almonty Industries is focusing on geopolitically secure countries such as South Korea in its tungsten mining projects. The Sangdong Mine there has been proven to hold large tungsten deposits. Almonty Industries is well equipped financially to exploit this treasure trove of raw materials.
Conflict of interest
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