Winners in the tariff war: Almonty Industries, MP Materials, Bayer

Raw materials war between China and the US

Donald Trump's latest tariff threat against China has once again turned the world's attention to a long-simmering conflict between the superpowers: the battle for raw materials. Beijing dominates the global processing of key raw materials such as tungsten, rare earths, graphite, and lithium - materials that are indispensable for batteries, microchips, armaments, and the energy transition. Export restrictions are being used as a means of pressure. Washington is responding with massive support programs to expand its own supply chains. The raw materials conflict has thus long since become a geopolitical power struggle for technological sovereignty and economic security.

In order to gain access to critical raw materials and, as far as possible, to establish production in the US, the US government has acquired stakes in numerous companies in recent months. MP Materials was the first in July. The US Department of Defense invested around USD 400 million. MP Materials owns the only major rare earths production facility in the US. Production is set to be significantly expanded in the coming years. Similar investments have also been reported in the lithium sector in recent weeks. At least one key raw material is still missing: tungsten. This extremely hard material is indispensable not only in defense and aerospace. And, incredibly, the US is 100% dependent on imports.

Almonty Industries: Speculation about US entry is justified

First things first: the possibility of the US government acquiring a stake in Almonty Industries remains pure speculation. Nevertheless, several factors make such a move appear entirely plausible. First, there is the urgent demand in the US, coupled with a lack of domestic production and the fact that China controls more than 80% of the tungsten market. Mining tungsten is complex due to the metal's extreme hardness - an area where Almonty has proven expertise. The Company already operates a mine in Portugal and, in South Korea, has developed the Sangdong mine, the largest tungsten mine outside China, which is now entering production. Almonty CEO Lewis Black already announced that production volumes from South Korea would mainly go to the US in the future. Incidentally, the Company is currently relocating its headquarters from Canada to the US.

In an interview with Bloomberg a few weeks ago, Black also announced that Almonty was reviewing takeover candidates in the US in order to establish a local production site. These are likely to be explorers who could really use Almonty's support in setting up production. The US government could come into play and get involved in order to finance the ramp-up of production. It has done so in comparable cases involving lithium in recent weeks. The final piece of the puzzle is the share price. In recent weeks, Almonty's share price has risen by over 50%. It would have been understandable if investors had used Friday's stock market turmoil to take profits, causing the stock to fall significantly. However, this was not the case. The share price recovered noticeably from its daily low and closed trading down only 1%.

By the way: MP Materials has impressively demonstrated the significance that the Trump administration's involvement can have on a company and its shares. Before the government's entry, the share price stood at around EUR 26 at the beginning of July. On Friday, it was trading at over USD 78.

https://youtu.be/24TSlyX22aM?si=HfFGTfWGFubr7HEh

Bayer: Goldman Sachs recommends buying

Conservative stocks are indirect winners of the Trump storm. Bayer is one of them. Goldman Sachs recently recommended buying the Leverkusen-based company's shares again. Analysts are conservative in their earnings estimates for the third quarter. They expect EBIT to be 11% lower than the consensus and earnings per share to be as much as 45% lower.

Due to seasonality, they expect the agricultural business to be relatively weak. In addition, overall costs are likely to be higher than estimated by fellow analysts. Nevertheless, Goldman analysts see the fair value of Bayer shares at EUR 34.50. The shares are currently trading at around EUR 28. According to marketscreener.com, 12 out of 19 analysts currently recommend "Holding" Bayer shares. Another 7 recommend "Buying". The highest price target is EUR 39.

This year, Bayer shares are one of the positive surprises. Despite the ongoing glyphosate litigation, the stock has gained almost 45%.

Almonty shares showed impressive relative strength on Friday against the backdrop of price gains in recent weeks. An entry by the US government is pure speculation, but it would make sense and would likely push the price above the EUR 10 mark. But even without this speculation, the news flow for the tungsten play is likely to remain positive. MP Materials shares have remained at a high level following the US government's entry. The recent dispute between the two superpowers highlights how crucial rare earths will be for the US. In contrast, buying Bayer shares does not seem compelling at the moment.