November 6th, 2024 | 07:25 CET
K+S, Almonty Industries, Barrick Gold – Commodities: The secret ingredient for your investment success
In times of economic uncertainty, investing in commodities is becoming increasingly attractive for investors. Not only do commodities offer protection against inflation, but they are also essential building blocks for technological innovation and industrial growth. This market offers natural diversification for any portfolio, from precious metals to energy sources and agricultural products. Historically, commodities have shown that they provide stable returns and long-term value appreciation potential, especially in times of crisis. For investors with foresight, the commodities sector could be a worthwhile addition to their investment strategies.
time to read: 4 minutes
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Author:
Armin Schulz
ISIN:
K+S AG NA O.N. | DE000KSAG888 , ALMONTY INDUSTRIES INC. | CA0203981034 , BARRICK GOLD CORP. | CA0679011084
Table of contents:
Author
Armin Schulz
Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.
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K+S: Challenges and hope
For K+S, the leading German supplier of potash, times in the fertilizer market are challenging. After a period of growth, the market situation has changed significantly. The latest price pressure is affecting financial results, despite increased sales volumes. However, experts believe that K+S continues to have a solid foundation thanks to its strategic diversification in salt production. This two-pronged approach mitigates risks compared to more focused peers such as Yara. However, the price war remains a key concern as geopolitical events heavily influence market developments.
Alongside the challenging market dynamics, K+S is undergoing a decisive change in management. Burkhard Lohr, currently CEO, is retiring in May 2025. He will be succeeded by Christian Meyer, the current Chief Financial Officer, who is expected to play a significant role in continuing the strategic direction of K+S. These changes are part of a broader strategic plan to optimally position the Company in a complex and uncertain market environment. Carin-Martina Troltzsch will further strengthen the management team as Deputy Chairperson, taking on a crucial role in the new management structure.
K+S is optimistic about the future and is guided by long-term market trends such as continued global demand for fertilizers. The market balance is expected to tip in favor of suppliers who have an advantage through flexibility and strategic adjustments. Given the favorable price-to-sales ratio and a potentially undervalued share price, investors could benefit from exposure. The upcoming quarterly figures on November 14 could point the way for the next few months. The share price currently stands at EUR 12.135.
Almonty Industries – Significant upside potential
Almonty Industries, a Canadian company focused on tungsten, is a promising player in an increasingly scarce market. The centerpiece of the Company is the Sangdong mine in South Korea, which is scheduled to resume operations in 2025. With an exceptional tungsten grade of 0.51% and estimated production costs of just USD 110/MTU, it offers enormous profit potential. The secured supply contracts with the Plansee Group also ensure planning security. The mine has the largest tungsten reserves in the world and is already 70% secured by project financing. Further upside potential exists due to the adjacent molybdenum deposit.
The focus is on the Sangdong mine because, in addition to tungsten extraction, it also offers the possibility of operating a vertical plant to produce tungsten oxide. This opens up access to higher-margin products for the battery and semiconductor industries, where tungsten is indispensable due to its unique properties, such as high melting temperature and heat resistance. The success of the pilot tests, with a tungsten concentrate yield of over 60% WO3, underscores the Company's technical expertise. Since South Korea has the highest tungsten consumption per capita in the world, there is a huge market.
In addition to Sangdong, Almonty operates the Panasqueira mine in Portugal and is developing further projects in Spain. Panasqueira, the world's longest continuously producing tungsten mine, offers further growth potential through a planned expansion. The expansion is expected to increase production by approximately 40% and extend the mine's life by over 20 years. These plans are being promoted by the Portuguese government and may be supported by an EU program that could provide Almonty with access to subsidies and low-interest loans to facilitate the expansion. The good prospects have driven up Almonty's share price. A share currently costs CAD 0.83, with the annual high at CAD 0.97.
Barrick Gold – Fourth quarter expected to improve
Barrick Gold is currently in negotiations with the Malian government. The background to this is the accusation that the Company has not fulfilled its promises to distribute profits from gold mining. Barrick rejects these accusations but is willing to engage in dialogue and has already made a payment of USD 85 million as a sign of goodwill. The aim is to reach a new memorandum of agreement that defines future cooperation and strengthens the state's share of the mine's revenues. However, the negotiations present challenges for Barrick, which could be influenced by political developments in Mali.
In Q3, Barrick reported gold production of 943,000 ounces and sales of 967,000 ounces. Its flagship projects, such as Pueblo Viejo and North Mara, achieved remarkable increases. Particularly noteworthy is the successful expansion of production through plant optimization at Pueblo Viejo and improved mining at North Mara. Despite these improvements, costs increased compared to Q2, partly due to higher wages as a result of increased gold prices. However, the Company predicts a stronger performance in Q4.
The future outlook for Barrick Gold remains optimistic. An expected increase in gold prices could positively impact the Company over the next few years. Market analysts predict that costs will fall and production will increase in the fourth quarter, giving the Company a competitive advantage. Nevertheless, the political environment in Mali remains an important factor. In the long term, a stable partnership with the government and a rise in gold prices could offer Barrick additional growth opportunities. The share price has recently fallen due to the allegations surrounding Mali and is currently trading at USD 18.90.
Commodities remain an attractive investment option during economic uncertainty and offer investors diversification and protection against inflation. K+S, as a leading supplier in the potash sector, is navigating a solid foundation despite challenges in the fertilizer market, supported by strategic diversification in salt production. Almonty Industries stands to benefit from the planned reopening of the Sangdong mine in South Korea, which offers the potential for significant profits in the tungsten sector. Barrick Gold, with strong projects such as Pueblo Viejo, expects a better performance in the fourth quarter.
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") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
In this respect, there is a concrete conflict of interest in the reporting on the companies.
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 also 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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