Ammunition shortages pressure the defense industry: Opportunity for Almonty, challenges for General Dynamics and Rheinmetall

General Dynamics Supplies Urgently Needed Ammunition

The US company General Dynamics plays a crucial role in US ammunition production. In the current crisis environment, the Combat Systems division is proving to be a key growth driver. This division encompasses the production of main battle tanks and, through its subsidiary OTS, the manufacture of large-caliber ammunition and warheads. In the fourth quarter of 2025, this division closed with a book-to-bill ratio (order intake relative to revenue) of 4.3, while the order backlog increased by 60% to USD 27.2 billion. General Dynamics benefits from its position as a major supplier of NATO ammunition, as evidenced by orders from Germany worth over USD 4 billion, as well as orders from Canada and the United Kingdom. This business is further supported by the Marine Systems division, which recorded revenue growth of 16.6% last year and is preparing for the US Navy's planned fleet expansion with investments exceeding USD 2.1 billion in 2026. At the group level, the company generated revenue of more than USD 52 billion in the past fiscal year and reported operating cash flow of USD 5.1 billion.

Rheinmetall is Accelerating Capacity Expansion

In Germany, Rheinmetall has become a key player in the European defense industry. The Group benefits from Germany's special defense fund and structural rearmament in Europe. The figures for the Weapon and Ammunition division are strong. In a market environment where demand exceeds supply, Rheinmetall achieved an operating margin of 29.3% in this segment in 2025. The Group is expanding its capacities and is currently building 13 new plants in Europe or expanding existing facilities. One key component is the new plant in Unterlüß, where production of 155 mm artillery shells is set to rise from 25,000 units in 2025 to 140,000 in the current year. This development is supported by government purchase guarantees. For the 2025 fiscal year, Rheinmetall reported an operating profit of EUR 1.84 billion on revenue of EUR 9.93 billion. For 2026, management expects revenue to jump to as much as EUR 14.5 billion and the order backlog to grow to a staggering EUR 135 billion.

Almonty Industries as a Tungsten Monopolist

The operational capacity of companies such as Rheinmetall and General Dynamics is directly linked to the availability of critical raw materials. Due to its exceptional density and heat resistance, tungsten is essential for penetrators in artillery ammunition, armor systems, and rocket nozzles. China currently controls around 83% of global production and restricts exports through quotas, pushing the market into what many analysts describe as a supercycle. Prices for tungsten concentrates have risen sharply in recent months. While tungsten traded at around USD 340 at the beginning of 2025, the market price today is well above the USD 2,200 mark. In this environment, Almonty Industries is assuming a key role. Since the start of mining operations at the Sangdong mine in South Korea in December 2025, the company has become one of the largest tungsten producers outside China. At the same time, management is pushing ahead with the expansion of the Panasqueira mine in Portugal and developing the Gentung-Browns Lake project in the US to strengthen the Western supply base. Almonty's commercial structure also secures supply contracts spanning 15 years. These contracts guarantee a minimum price of USD 235 per MTU, but deliberately exclude a price cap. This allows the company to benefit directly from rising market prices, regardless of how far the price of the largely irreplaceable metal continues to increase.

Shift in Value Creation Creates Opportunities

For investors, the current environment marks a turning point within the defense industry. While defense contractors have historically captured the largest share of value creation, pricing power is increasingly shifting toward the beginning of the supply chain. A defense contractor cannot afford to halt production of critical systems due to a shortage of tungsten components. General Dynamics and Rheinmetall, therefore, remain key players in the current market environment, with large order backlogs providing strong revenue visibility. Almonty, however, positions itself as the supplier of what the entire industry urgently needs: tungsten. As the tungsten market continues to be defined by structural scarcity, Almonty's stock could offer investors a unique opportunity to benefit from the ongoing realignment of Western supply chains for critical metals.