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February 23rd, 2023 | 16:13 CET

Almonty Industries, Rheinmetall and Amazon - The profiteers of the crises

  • Mining
  • Tungsten
  • Defense
  • crisis
Photo credits: Lockheed Martin

South Korea is one of the few democratic countries with high tungsten deposits. Almonty Industries is a mining company with unbeatable expertise, bringing a disused tungsten mine in South Korea back to life. The metal is urgently needed in the defense, aerospace and automotive industries. Until now, China and Russia have dominated the tungsten market. But the last 24 months have shown how fragile supply chains and democracies can be. Alternatives are needed. One profiteer of the crisis is the arms company Rheinmetall. Since Russia launched its war of aggression in Ukraine, the share price has shot up. Amazon employees are currently experiencing the exact opposite. Their wages are supported partly by share packages - and thus, a disaster could occur in 2023.

time to read: 4 minutes | Author: Juliane Zielonka
ISIN: ALMONTY INDUSTRIES INC. | CA0203981034 , RHEINMETALL AG | DE0007030009 , AMAZON.COM INC. DL-_01 | US0231351067

Table of contents:


    Lewis Black, CEO, Almonty Industries
    "[...] While tungsten has always played an important role in the chip industry, it is now being added to batteries for e-cars. [...]" Lewis Black, CEO, Almonty Industries

    Full interview

     

    Almonty Industries - A successful company for the next 100 years

    Value investors who implement Warren Buffett's or Charlie Munger's strategies already know it: with high-quality companies, compound interest enormously potentiates the value of the stock over time. Almonty Industries can be such a value candidate with which investors make a valuable investment over the long term. The mining company specializes in the extraction and processing of the rare metal tungsten. A metal that is mainly used in defense, automotive, aerospace, and tech due to its hardness. To date, countries like China and Russia have dominated the tungsten market. But the last two years have proven how fragile supply chains are, be it due to pandemic lockdowns in China or the Russian war of aggression in Ukraine.

    South Korea is one of the few democratic countries with high tungsten deposits. Almonty Industries is focusing intensively on restarting the Sangdong tungsten mine in South Korea. The disruptions to global supply chains are creating dislocations across entire industrialized nations, as felt by the automotive industry through the semiconductor crisis.

    Almonty Industries CEO Lewis Black is pleased with the progress of current drilling at the Sangdong Mine. "Within 1.5 meters of the (drift) bolts, we are encountering tungsten, and we cannot even find bare spots to work for access ramps. It is an unusual problem to have as an operator, but a good one," he explained to the audience at the 6th International Investment Forum (IIF).

    "Our schedule has not changed (due to pandemic-related supply chain disruptions). We are maybe two months behind schedule because material arrived in the country later than we would have liked. Given the longevity of this project, it is more important that we finish it on budget than that we finish it on time. Because we are building something that will be in operation for more than 100 years." So Lewis is betting on debt-free.

    Value investors love debt-free companies with a strong CEO, a far-reaching outlook for the future, and the possibility of continued appreciation in the value of outstanding shares. It appears Almonty Industries more than meets these criteria. The investor presentation from the 6th International Investment Forum - IIF can be viewed in the YouTube video below:

    Rheinmetall - Fighter jet construction on German soil sealed

    German defense contractor Rheinmetall has signed an agreement with Lockheed Martin and Northrop Grumman to jointly build F-35 fighter jets. This deal includes establishing a second Integrated Fuselage Assembly Line (IAL) factory in Germany, increasing the European industrial partners' contribution to the global F-35 program. **The German government gave its approval in December 2022 for the purchase of thirty-five F-35 fighter jets from Lockheed Martin.

    The first industrial aerospace engineering facility (IAL) is operated by Northrop Grumman in Palmdale, California, USA. The corporation manufactures and supplies the center fuselages for all three variations of the F-35 fighter aircraft there. Northrop Grumman is one of the primary partners of the Lockheed Martin F-35 Lightning II programs. The Company also manufactures and manages flight instructor training software, avionics flight electronics systems, wing skins and sensor systems.

    Commenting on the agreement, Rheinmetall CEO Armin Papperger says: "The long-standing partnership between Lockheed Martin and Rheinmetall, as well as the close relations that have existed between the Bundeswehr and our company for decades, result in a genuine transfer of know-how to Germany as an industrial location."

    Numerous analysts have recently raised their price targets for Rheinmetall. Goldman Sachs names a price target of EUR 290, Berenberg Bank sets a target price of EUR 240, and Deutsche Bank AG EUR 250. JPMorgan Chase & Co. even set a price target of EUR 265 for Rheinmetall in a research report dated February 10, 2023.

    Amazon: Share price slump causes employee wages to melt away

    According to the Wall Street Journal WSJ, Amazon employees will receive less pay because the group's stock has fallen. Amazon pays a significant portion of its employees' annual pay as restricted stock units. A restricted stock unit (RSU) is a form of stock-based compensation that rewards employees.

    Now, a continued downward slide in Amazon's stock could result in wages in 2023 that are between 15% and 50% lower than previous paychecks, WSJ reports. Last year, Amazon raised its highest base salary to EUR 328,772 from EUR 150,280, citing a competitive advantage in the job market. Compared to other large tech companies, Amazon used to pay its employees less in base compensation but replaced that difference with stock bonuses that are convertible over a period of time. Employees disclosed that the longer they work for Amazon, the more dependent their pay becomes on stock awards, with packages that can represent up to 50% or more of their annual income.

    Over the past 12 months, the value of Amazon's stock has fallen 36% to EUR 91.26, the same price it was trading at in the first half of 2020.


    Macroeconomic correlations, such as the market dominance of Russia and China in the tungsten market, call for democratic alternatives in the face of political tensions. With the restart of the Sangdong mine in South Korea, Almonty Industries succeeds exactly in this move, which allows the Company to produce for more than 100 years. Given the need to defend borders and countries, Rheinmetall benefits from the new agreement with Lockheed Martin and Northrop Grumman. The fuselage of the F-35 fighter jet will be built on German soil, sending the German defense company's stock price soaring. Amazon employees, on the other hand, must fear for their wages. Since these come partly from share packages, a 15 to 50% loss could become a bitter reality for some employees in 2023.


    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.

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    Der Autor

    Juliane Zielonka

    Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.

    About the author



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