Case for Mine Expansion - to meet the 3000T p.a required for the Nano Tungsten Oxide Plant, it would basically take 84% of the 55% production. In other words, there would only be 575t of tungsten left to sell to the open market after taking the mine to maximum capacity.
- Currently China produces 83,670 tonnes of tungsten in which S.Korea consumes approximately 50% (based upon the Almonty Investor Presentation pg 33). But lets assume S.Korea imports 25,000t from China, that is to say, 94.7% of the tungsten imported comes from China. If S.Korea is serious about diversification of their supply lines, then Almonty will have to expand production to meet that requirement. Just to reduce China's import by 10%, Almonty will have to double production.
- Samsung total assets is $360B US (2021). Considering they are investing $420B US over the next 8 years means they must be increasing Samsung's semiconductor output by at least 50%. Any company that invests that amount of money, there is no way the achieve maximum capacity as soon as the new plants and equipment are ready for production. It takes time to ramp up production, but you also want room to increase production should you ever need it in the future. The initial ask was for 3000t.... I think that is for the initial production. Almonty has to be ready for additional growth and the only way to do that is to expand production.
- LB has previously stated there are several companies being extra nice over the past while because they wish to diversify their supply lines too. If we are to supply to them too, then LB will have to expand production.
- The Automotive industry is in a slump due to supply chain issues. That too will increase the demand for tungsten.
- We must also keep in mind that Valtreixal has yet to be brought online which will contribute to Almonty's production expansion.
Although the reasons above don't provide conclusive proof of production expansion at Sangdong, but together they provide compelling reasons to have production expanded. The only question is, how much should Almonty expand production by? At least another 50%.