Almonty Industries expanding U.S. tungsten mining

Key Concepts

• Tungsten: A rare metal crucial for technology, semiconductors, defense, and automotive industries.
• China's Dominance: China controls over 80% of the global tungsten supply, leading to price volatility and supply chain concerns for the U.S.
• Almonte Industries: A mining company leading efforts to restart tungsten mining operations in the U.S.
• Lake Tungsten Project: Almonte's project in Montana, acquired for $10 million, aiming to onshore U.S. tungsten production.
• Onshoring Technology: Bringing critical manufacturing and resource extraction back to the United States.
• ESG (Environmental, Social, and Governance): Principles guiding responsible mining practices, with Almonte adhering to the Equator Principles.
• Pentagon Ban: The U.S. Department of Defense plans to ban Chinese tungsten starting in 2027.
• Redomiciling to the U.S.: Almonte's transition from Canada to the U.S. for its primary listing on the NASDAQ.

Tungsten Price Surge and Supply Chain Concerns

The price of tungsten has skyrocketed by 130% this year, more than doubling from approximately $320 per metric ton at the beginning of the year to nearly $800 per metric ton last week. This dramatic increase is attributed to China's tightening grip on the global tungsten supply, which it dominates, accounting for over 80% of the world's production. This situation has created significant supply chain vulnerabilities for the United States, particularly in critical sectors.

Almonte Industries' Initiative to Onshore Tungsten Production

In response to these concerns, Almonte Industries is spearheading the effort to restart tungsten mining operations in the U.S., a venture that has not been undertaken in a decade. The company has invested $10 million to acquire the Lake Tungsten Project in Montana, identified as the top tungsten project in the U.S. Lewis Black, CEO of Almonte, highlighted that the project was chosen due to its existing permits and the family's commitment to its development. The goal is to "onshore our technology into the United States" and reduce reliance on foreign supply.

Critical Applications of Tungsten

Tungsten is an indispensable metal used in both industrial and technological applications. Its three main drivers of demand are:

• Technology and Semiconductors: Tungsten is essential for the development of new semiconductors, which are foundational for advancements in Artificial Intelligence (AI).
• Defense: The metal plays a crucial role in military applications and weaponry.
• Automotive: With interest rate drops, the automotive sector is also contributing to the increased demand for tungsten.

China's Export Controls and Business Strategy

The transcript suggests that China's scaling back and heightening of export controls on tungsten to the United States, which eventually led to exports going to zero, was not purely ideological but a strategic business move. Lewis Black explained that China has been developing its downstream capabilities to utilize these materials domestically over the past decade. They are reportedly reluctant to continue supplying their Western competitors with components that enable them to produce finished goods. The cessation of subsidies last year further impacted supply, leading to the closure of several mines in China.

Almonte's Global Operations and U.S. Mine Timeline

Almonte Industries currently operates mines in Portugal and is set to open operations in South Korea. While historically the Western supply was fed from Central Africa, China's dominance has shifted this dynamic. Almonte aims to replace this Western supply with its own production. Regarding the U.S. Lake Tungsten Project, the company is starting commissioning now, with commercial production expected to be delivered in the first quarter of next year. Black noted that developing a mine in a democracy typically takes eight to ten years, and Almonte acquired this project in 2015, marking a decade-long journey.

Environmental Considerations and ESG Standards

While the transcript acknowledges that tungsten mining itself doesn't present the same environmental issues as some rare earth element refining processes, modern mining operations are built to stringent standards. Almonte is adhering to the Equator Principles, which represent the highest level of ESG (Environmental, Social, and Governance) standards. This signifies a sophisticated approach to mining that prioritizes environmental preservation, a departure from older, less regulated methods.

U.S. National Security and Pentagon Ban

The U.S. Department of Defense has announced a ban on Chinese tungsten, effective from 2027. Almonte Industries is already in discussions with the U.S. government, indicating they have sufficient output to meet the nation's national security needs.

Almonte's Financial Performance and U.S. Listing

Almonte's stock price has seen significant growth, up over 141% in the past six months. The company is in the process of redomiciling from Canada to the United States. While previously trading on the Toronto Stock Exchange, Almonte will have its primary listing on the NASDAQ in January, having already been listed in Delaware. This move is expected to be supported by upcoming news that will continue to advance the company's narrative. Almonte gained visibility when China restricted tungsten exports, positioning them as a credible alternative in the market.

Conclusion and Future Outlook

Almonte Industries' initiative to restart U.S. tungsten mining is a critical step towards reducing American reliance on China for this vital rare metal. With commercial production from the Lake Tungsten Project slated for early next year, and adherence to high ESG standards, Almonte aims to provide a secure and environmentally responsible supply for U.S. technological, defense, and industrial needs. The company's strategic redomiciling to the U.S. and strong stock performance underscore its potential to significantly impact the global tungsten market and bolster U.S. supply chain resilience.