RTX, Almonty Industries, Rheinmetall – The Battle for Tungsten Escalates

Rheinmetall: The Defense Boom Enters the Next Phase

Rheinmetall continues to expand its production capacity. On Thursday, the company, together with the state of Hesse, presented plans for the new "Defense Hub North Hesse". A logistics and technology center, additional capacity at the existing site, and a drone test center are being built at Kassel Airport. In total, Rheinmetall plans to invest hundreds of millions of euros. The logistics center, which spans more than 30,000 square meters, is scheduled to begin operations at the end of 2027.

The expansion underscores the pace at which Europe's defense industry is currently creating additional capacity. At its Kassel site, Rheinmetall produces, among other things, the Leopard 2 main battle tank and recovery and engineering vehicles. At the same time, the group is investing billions across Europe in new plants and increased production capacity for ammunition and military systems.

As production rises, so does the demand for strategic raw materials. Due to its high density, hardness, and heat resistance, tungsten plays an important role in various military applications. China still dominates the global supply of this material.

The European defense boom thus faces a raw materials supply that continues to involve significant geopolitical dependencies. For Rheinmetall, demand remains the least of its problems. What is becoming increasingly critical is whether the necessary materials are available in sufficient quantities and from secure supply chains.

Almonty Industries: US Intensifies the Battle for Tungsten

The market environment is increasingly improving for Almonty Industries. Since August 27, new regulations regarding tungsten waste and scrap have been in effect in the US. American sellers are generally required to make 100% of their monthly volumes available to US buyers. Sales abroad are now only possible with an exemption from the Bureau of Industry and Security. The rationale behind this is the classification of critical raw materials as scarce and essential to national defense.

The US is determined to keep strategically important tungsten supplies within its own borders. This development is particularly interesting for Almonty. With Sangdong in South Korea, the producing Panasqueira mine in Portugal, and the Gentung project in Montana, the company is establishing a tungsten platform outside of China. Sangdong has already begun processing and is producing marketable tungsten concentrate. The second phase of expansion is expected to increase capacity to up to 1.2 million metric tons of ore per year.

Financially, Almonty has also reached an entirely new level. In the second quarter, revenue jumped 498% to CAD 43.0 million, and adjusted EBITDA improved from a loss of CAD 4.8 million to a profit of CAD 17.6 million. Following the oversubscribed USD 800 million convertible senior notes offering, the company had approximately CAD 1.2 billion in cash on hand at the end of June. This will allow the company to proceed in parallel with Sangdong Phase II, the planned tungsten oxide plant, Gentung, and the expansion of Panasqueira.

The new share repurchase program could provide additional support for the stock. Since August 24, Almonty has been authorized to repurchase up to 14.4 million of its own shares over a three-year period—approximately 5% of the outstanding shares. A maximum of USD 300 million is available for this purpose. CEO Lewis Black explained the move, stating that from management's perspective, the current share price does not adequately reflect the value of the company's strategic assets and growth prospects.

While Washington is increasingly treating tungsten as a matter of national security, Almonty continues to ramp up production, has enormous financial resources at its disposal, and can simultaneously remove a significant portion of its own shares from the market. The buyback program is thus likely not only to signal management's confidence but, if consistently implemented, could also reduce the supply of freely tradable shares and provide additional support for the share price.

RTX: Billion-Dollar Contracts Drive Capacity Expansion

The US defense industry is also continuing to expand its capacity. RTX subsidiary Raytheon announced on Thursday the completion of a USD 50 million expansion of its facility in Forest, Mississippi. The production area has increased by approximately 17,000 square feet. An additional 100 highly skilled jobs are expected to be created by 2028.

The facility specializes in electronic warfare and radar systems. In the past 10 years alone, Raytheon has invested approximately USD 280 million in three expansions of the plant. The latest investment shows that capacity expansion is continuing despite the already high production base.

The enormous order backlog is providing additional momentum. In mid-August, Raytheon received a seven-year framework contract for Tomahawk cruise missiles with a potential total value of up to USD 22.9 billion. Annual production capacity is set to rise to more than 1,000 Tomahawks.

RTX thus exemplifies the American defense boom. New orders not only lead to higher sales but also require additional factories, machinery, and raw materials. The more the US expands its weapons production, the greater the strategic importance of an independent supply of critical materials becomes.

The defense boom is increasingly shifting the focus to upstream supply chains. Rheinmetall and RTX are investing billions in additional capacity, while China controls large portions of the supply of strategic raw materials. Almonty Industries could benefit disproportionately from this. The Sangdong project is ramping up, additional projects are set to be developed in parallel, and approximately CAD 1.2 billion in liquidity secures the financing. If tungsten becomes a strategic bottleneck for the West, the value of independent production capacity is likely to rise further.