August 26th, 2025 | 07:05 CEST
The defense industry in an Industrial Revolution! Rheinmetall, RENK, and Almonty Industries are benefiting!
The defense industry is at the beginning of a supercycle. This will not change even if peace is achieved in Ukraine, which is hardly more likely after the recent summit. After years of limited capacity, often small-scale production, and difficult financing conditions, the industry is increasingly moving into a new dimension of industrialization. To rapidly rearm Europe, the focus is shifting toward standardized products, larger quantities, and efficiency along the value chain. RENK and Rheinmetall are already following this path. But of course, suppliers must also keep pace. The fact that more tungsten will soon be available outside China is likely to be a blessing for Western defense companies. Almonty has built a state-of-the-art new mine in South Korea. Analysts expect massive increases in revenue and profits.
time to read: 3 minutes
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Author:
Fabian Lorenz
ISIN:
RHEINMETALL AG | DE0007030009 , RENK AG O.N. | DE000RENK730 , ALMONTY INDUSTRIES INC. | CA0203987072
Table of contents:
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Author
Fabian Lorenz
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
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RENK: Standardized gearboxes for greater efficiency
"Handelsblatt" recently reported that RENK is working on a standardized gearbox for tanks. The idea behind this is that instead of developing different drive variants for each tracked vehicle, a uniform gearbox could be used across multiple models. This approach would reduce costs, speed up manufacturing processes, and streamline supply chains—in principle, industrial scaling as we know it from the automotive industry. In fact, industry is adapting to this pattern. Factories and personnel from struggling automotive suppliers are increasingly being taken over by the defense industry to take the production of vehicles, ammunition, and components to a new level.
RENK shares were trading well at the start of the week. After the sell-off surrounding the meeting between the Russian and US presidents in Alaska, the share price has crept back up to the EUR 60 mark. Unfortunately, peace in Ukraine is not in sight.
Rheinmetall: Breaking new ground with the Lynx armored vehicle
Rheinmetall is also pushing ahead with mass production projects. One example is the series production of the Lynx infantry fighting vehicle. Germany's largest defense contractor is fundamentally realigning this project. Instead of traditional individual production, the Düsseldorf-based company is relying on a modular design principle that facilitates adaptation to different armies and speeds up production processes. In addition, new plants are being built in Eastern Europe – for example, in Hungary, where a factory with an annual capacity of around 50 vehicles is being set up in Zalaegerszeg. Similar plans are in the pipeline in Romania and Ukraine. This will bring production closer to the customer markets, shorten supply chains, and increase capacity utilization. For Rheinmetall, this means entering industrial mass production, which not only enables economies of scale but also raises the entire European defense industry to a new industrial level.
At the same time, the Company is working with partners on standardized artillery systems and ammunition production lines to meet the immense demand of Western armies more quickly. Industry observers also note that companies like Volkswagen are examining how their industrial expertise in large-scale production can be transferred to the defense sector—a clear signal that the boundaries between civilian and military production could become even more blurred in the future—something that was unthinkable just a few years ago.
Almonty: Tungsten critical for modern defense technology
One aspect often overlooked in the current defense boom is the importance of raw materials at the very beginning of the value chain. Mass production by defense companies is only efficient if the entire supply chain is aligned. Tungsten, for example, is a key material for modern defense technology. Its hardness, density, and heat resistance are critical for many military applications. It is mainly used in armor-piercing ammunition, where tungsten alloys can penetrate even the toughest armor thanks to their extreme density. It is also used in the form of tungsten carbide plates in modern protection systems and is indispensable in rocket and aviation technology.
The challenge with tungsten: China currently controls around 80% of the global market, and it is repeatedly used as a geopolitical weapon. Prices are rising accordingly. Since this year, the price has shot up from USD 300/mtu to over USD 500/mtu.
Investors can gain exposure through shares of Almonty Industries. The Company is currently relocating its headquarters from Canada to the US, where the US defense industry is also its largest customer. Work is currently underway to start production at the new tungsten mega mine in South Korea. The Sangdong mine will not only multiply current output in Portugal, but will also be significantly more efficient.
Analysts at German research firm Sphene Capital forecast that Almonty will generate CAD 144 million in revenue next year and CAD 300 million by 2027. Net profit is expected to climb from CAD 37.4 million in 2026 to CAD 115.2 million, with an upward trend continuing. The analysts therefore see the fair value of Almonty shares at CAD 8.40.
Matthias Greiffenberger, an analyst at GBC Research, highlighted Almonty's apparent undervaluation compared to rare earth highflyer MP Materials in an interview with Lyndsay Malchuk from Stockhouse Media..
The supercycle in the defense industry has only just begun. While major manufacturers such as RENK and Rheinmetall are taking their production to a new level, the rest of the value chain must follow suit. Tungsten is a critical material in many areas, and Almonty is set to earn billions in the coming years.
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