Unparalleled expertise in tungsten: Why Almonty Industries is in pole position

Refining tungsten is profitable – But very few can do it

At a time when industrial companies were able to order subsidized tungsten and tungsten products cheaply from China, Lewis Black put all his eggs in one basket. More than twenty years ago, he was Chairman and CEO of the tungsten company, Primary Metals. Prior to that, he served as the marketing director for SC Mining Tungsten in Thailand. In 2011, he founded Almonty Industries. Together with far-sighted anchor shareholders such as the Austrian Plansee Group and Deutsche Rohstoff AG, Black invested his own capital to make Almonty a fully integrated tungsten supplier. The German Kreditanstalt für Wiederaufbau (KfW) has been one of the partner banks for many years and finances the Sangdong mine.

After the Sangdong mine goes into production this summer, Almonty plans to complete a processing plant by 2027. The "Sangdong Downstream Extension Project" is expected to have a capacity of 4,000 tons of tungsten per year and produce ammonium paratungstate (APT) and nano-crystalline tungsten oxide. This refining of tungsten is particularly profitable and leads to significant price premiums. Industry experts emphasize that the market entry barriers for tungsten and products made from it are particularly high. The reason: expertise in tungsten is rare. When talking to Lewis Black about the situation in China, he repeatedly mentions subsidies in the Middle Kingdom. For years, state support has ensured that efficiency in the extraction and processing of tungsten has not played a major role. The result: China is no longer competitive.

Generations of experience bring cost advantages

The production costs of Chinese state-owned tungsten mines range between USD 205 and 245 per tonne. According to Lewis Black, the Sangdong mine in South Korea has the lowest production costs in the world at USD 110-120 per MTU, based on a conservative feasibility study. The reason for these cost advantages lies not only in the high grades in South Korea but also in Almonty's expertise. The Company operates the Panasqueira mine in Portugal, which has been in operation since 1896. Some of the miners there have been working for five generations and pass on their knowledge. A recent documentary by Lyndsay Malchuk from Stockhouse, who visited Panasqueira, shows what the situation is like on the ground in Portugal and what role the expertise of the Almonty Industries team plays for the company. You can find the video below this article.

The processing of tungsten presents several challenges. The material is extremely hard, cannot be machined with conventional tools for steel, and causes high wear on the tools used - which is one of the reasons why Almonty relies in part on historic machines that are no longer available for purchase today. With decades of knowledge in tungsten mining, Almonty has been operating what it claims to be the most modern tungsten laboratory in the world in Portugal for some time now. The goals: To process tungsten even more efficiently and satisfy customers such as the US defense industry and the far-sighted anchor shareholders of the Plansee Group.

Almonty Industries stands to benefit from tax incentives

The framework conditions surrounding the Sangdong mine indicate that shareholders could be among the long-term winners. The unique project, whose production capacity can be doubled with an additional investment of USD 17 million, offers high tungsten grades and significant tax advantages. The Sangdong mine is located in an area designated as a Foreign Investment Zone by the South Korean authorities. This means that no taxes are payable for the first three years after reaching profitability. In the subsequent two years, the tax rate is only half the standard South Korean corporate tax rate of 25%.

A story like something out of a movie – No chance for the competition

Looking at the development of Almonty Industries over the past few years, it reads like a movie script: A visionary CEO recognizes opportunities in the China-dominated tungsten market before anyone else, gradually builds up projects, and in the midst of a globalized world, bets everything on the giant Sangdong mine in South Korea. Then came the COVID-19 pandemic, initial doubts about globalization, the war in Ukraine, the burgeoning trade war, and escalating geopolitical tensions. Today, Almonty Industries is just a few weeks away from starting production in South Korea. Investors are increasingly recognizing that Almonty is the undisputed market and technology leader in the field of tungsten, a critical raw material used in defense and high-tech applications. The barriers to market entry for potential competitors are high. As a future partner to the US defense industry, this equity story is likely to be well received, especially in the US. Almonty Industries is planning a near-term listing on the Nasdaq.**