Deutz, Strategic Resources, thyssenkrupp – Defence and Resource Security: Three Stocks from Powertrains to Raw Materials and Steel

Deutz – Defence becomes a mainstay

On November 5, Deutz presented its figures for the first nine months of 2026. Order intake rose 30.4% to EUR 1,962.5 million, while revenue increased 11.3% to EUR 1,669.2 million. Adjusted earnings before interest and tax rose 36.0% to EUR 118.2 million; the adjusted margin improved from 5.8% to 7.1%. For the full year, the group expects revenue of EUR 2.3 billion to EUR 2.5 billion. It is targeting the upper end of the margin range, at 6.5% to 8.0%. Operationally, things are going well.

With the completion of the acquisition of FFG, Deutz has concluded the largest transaction in the group's history to date. The purchase is being partly financed through a capital increase against contributions in kind, which shareholders approved almost unanimously at an extraordinary annual general meeting at the end of August. For 2027, the company expects FFG to contribute over EUR 1 billion in revenue, with an adjusted EBITDA margin above 20%. So far, the defence business is small, with orders standing at EUR 89.2 million after nine months. FFG is intended to change that. If the integration succeeds, it would be a major step forward.

At the end of September, Deutz signed a letter of intent with Hypercraft, a company that develops unmanned ground vehicles, among other things. Deutz is to contribute its experience in engines, hybrid-electric systems and the integration of defence vehicles. Hypercraft is opening up its network of military customers to test new products for the American market. However, free cash flow before acquisitions stood at minus EUR 50.2 million after nine months, compared with EUR 2.4 million in the same period last year. The company attributes this primarily to higher inventories. If these can be reduced, more room for manoeuvre will remain.

Strategic Resources – Permitted raw material base for clean steel

Strategic Resources is developing the BlackRock project in Québec, where the mine near Chibougamau and the 1.5 million tonne metallurgical plant in Port Saguenay are fully permitted. Reserves amount to 127.8 million tonnes, and the permitted mine life is 39 years. The plan is to mine iron, vanadium and titanium. The company also operates Mustavaara in Finland, a formerly producing mine. According to the company, Mustavaara and nearby Otanmäki supplied around 10% of global vanadium production from 1976 through 1985. The measured and indicated resource there stands at 103.7 million tonnes with 0.90% vanadium in the concentrate. The foundation has been laid.

On May 26, Strategic Resources reported that it had submitted all its responses to questions from the environment ministry of the province of Québec. The permit for the pellet plant in Port Saguenay is to be expanded from 1.5 million tonnes to 4 million tonnes of iron ore pellets per year. According to the company's September presentation, the regulatory review is at an advanced stage. On June 29, the company reported that its concentrate from Mustavaara had been selected for a test programme for hydrogen-based ironmaking in the FutSteel project. The University of Oulu and other industry partners are involved. It has a budget of EUR 17 million and runs from 2026 through 2029.

For the BlackRock project, phase 1 envisages a plant in Port Saguenay producing 4 million tonnes of pellets per year for direct reduction. According to the presentation, the total investment amounts to USD 500 million, with the conveyor belt and utilities worth CAD 280 million being state-funded. There is a 10-year agreement with Javelin Global Commodities for raw material procurement and pellet sales, as well as a potential working capital facility of up to USD 150 million. A letter of intent (LOI) signed with Tyfast Energy in April is intended to examine whether vanadium oxide from Canadian ore is suitable for Tyfast's lithium vanadium oxide anode, potentially opening up a second sales market. The annual general meeting will take place on December 16.

thyssenkrupp – Steel division being prepared for the capital market

Europe's steel industry is reorganising, and thyssenkrupp is at the centre of it. At the end of October, group CEO Miguel López said, according to Reuters, that the group was preparing the steel division as the next candidate for a spin-off. The search for a partner was unsuccessful. On October 28, tk accelis, the former Materials Services business, debuted on the Frankfurt Stock Exchange. An extraordinary annual general meeting approved the spin-off of tk accelis in August 2026, with thyssenkrupp retaining a majority stake. A date for the steel division's IPO has not yet been announced. For investors, the timetable remains open.

On October 30, thyssenkrupp Steel reported that the amended funding decision for the tkH2Steel project had become final and binding. The European Commission had previously confirmed that the changes were compatible with state aid rules. The proportion of hydrogen can now increase gradually and more flexibly because the hydrogen market is developing more slowly than expected and green hydrogen is significantly more expensive than assumed. The direct reduction plant in Duisburg can operate on natural gas, hydrogen or a mixture of the two. According to the company, even using natural gas can reduce CO₂ emissions by over 50% compared with today's coal-based blast furnace route. This gives the project breathing space.

The direct reduction plant is intended to produce 2.5 million tonnes of directly reduced iron per year and save up to 3.5 million tonnes of CO₂ annually. The plant is capable of running on 100% hydrogen. On the construction site, the major concrete pours for the plant's tower and the two melters have been completed. A new tender for the long-term supply of hydrogen is due to start soon. According to the company, the first process provided important insights into prices, available volumes and supply chains. Philipp Conze, CFO of thyssenkrupp Steel, says the decision provides the planning certainty needed for construction. Construction is progressing.

Conclusion

Europe's rearmament needs a drive system, raw materials and steel. Deutz has completed FFG, the largest acquisition in the Group's history, and the figures for the first nine months are solid. If integration succeeds, the defence business could become a mainstay. Strategic Resources is awaiting a decision on expanding the pellet plant to 4 million tonnes. If it is positive, this could give the project additional momentum. At thyssenkrupp, the timetable for the steel division remains open, while the direct reduction plant in Duisburg continues to grow. This is what the supply chain could look like.