Amaero (ASX:3DA) Where US Reshoring Meets High-Value Metal Powders

Critical Metals, Defence Demand and a US-Focused Growth Story

For investors looking to uncover opportunities in structurally growing sectors, the reshoring of US manufacturing and the push to secure critical mineral supply chains continue to create meaningful tailwinds. Amaero (ASX:3DA) is emerging as a supplier of high value refractory spherical metal powders, including titanium alloys such as Ti64 and niobium. Niobium has recently experienced a notable increase in both demand and pricing, driven by its importance in advanced manufacturing and defence related applications.

Pitt Street Research recently completed its first initiation report on Amaero, valuing the company in a range of A$0.62 to A$1.30 per share using comparable EBITDA multiples across relevant US peers. We will unpack this valuation framework in more detail later in this article, and readers can also access the full initiation report for a deeper breakdown of the assumptions behind our analysis.

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From Powders to Parts and the Push Toward EBITDA Positive

In mid 2024, Amaero commissioned its manufacturing facility in Tennessee, positioning the company closer to key US defence and aerospace customers. The plant is focused on producing refractory titanium powders for high performance applications where material quality, consistency, and certification are critical. Management believes the company holds a competitive advantage through its advanced atomisation technology, proprietary process knowledge, and a cost efficient approach to powder production.

Beyond powders, Amaero has also developed the capability to manufacture finished components using its PM-HIP technology. This vertical integration has the potential to improve margins over time while strengthening customer relationships by offering a broader manufacturing solution.

Looking ahead, Amaero has guided to revenue of A$18 million to A$20 million by the year ending June 2026 and expects to reach EBITDA positivity by 2027. While execution risk remains, these targets provide a clear roadmap for scaling operations as demand for domestically produced, high performance metal powders continues to build across the US defence and aerospace sectors.

Not all titanium powder is equal

Titanium, with atomic number 22, is a lightweight, strong, and highly corrosion resistant metal with a strength to weight ratio that is more favourable than steel. These characteristics have driven growing adoption across the defence sector, particularly in aviation platforms, naval vessels, and military armour and weapons systems. As defence requirements evolve toward lighter, stronger, and more durable materials, titanium continues to attract increased attention due to its unique chemical and mechanical properties.

Importantly, not all titanium powders are the same. Higher grade powders require far tighter controls on purity, particle size, and consistency. Grade 5 and Grade 23 titanium powders sit at the premium end of the market and are primarily used in aerospace and medical applications where performance and reliability are non-negotiable. Amaero is producing these high specification powders at its Tennessee facility, positioning the company in a significantly higher value segment compared with lower grade industrial powders.

Qualification Is the Moat and Amaero Is Already Inside

One of the key competitive advantages in this market is qualification. Aerospace and defence customers will not purchase material without extensive testing and formal qualification, a process that can take two to three years. These long approval cycles create meaningful barriers to entry and lock in suppliers once qualification is achieved. Amaero has already completed qualification and testing with several customers, an important milestone that underpins future revenue visibility.

Customer Qualification Is Translating Into Real Orders

A notable example is Amaero’s successful qualification with Addman Group, where its C103 powder met customer specifications. This outcome triggered a five year preferred supplier agreement, positioning Amaero as a prime supplier of C103 powders to Addman and validating the quality of its production process.

Amaero has also qualified powders with Velo3D, supported by independent testing conducted at Auburn University. In this case, C103 powder met ASTM F3635 Class B standards, while Ti64 powder satisfied both AMS 7015 and ASTM F3001 requirements. These certifications are particularly important for aerospace and defence applications where compliance with recognised standards is mandatory.

Looking ahead, Amaero has orders in place from 14 different customers, with shipments expected to commence in early 2026. These orders span a range of high value powders, including C103, pure niobium, tungsten, TZM, and titanium alloys. Collectively, these customer relationships help validate Amaero’s positioning as a supplier of high purity, high value refractory metal powders and reinforce its credibility within demanding end markets.

Moving Up the Value Chain With PM-HIP

In addition to metal powders, we see a potentially underappreciated part of Amaero’s business model emerging through its PM HIP capability. PM HIP, or powder metallurgy hot isostatic pressing, represents a step up the value chain and positions the company beyond raw material supply and into finished component manufacturing for defence and aerospace applications.

Around 2023, as Amaero prepared to ramp powder production at its new US facility, management identified an opportunity to leverage its powder expertise into the production of titanium based components. The PM HIP process involves placing metal powder into a sealed metal container and subjecting it to high temperatures and very high isostatic gas pressure, typically in the range of 100 to 300 MPa. This process fully densifies the powder, consolidating it into a near net shape solid component with excellent mechanical properties.

Strategically, this capability moves Amaero further up the additive manufacturing value chain. Rather than selling only powders, the company can now supply finished or near finished components. This has the potential to materially increase value capture on a dollars per kilogram basis, support higher gross margins over time, and deepen integration with customers who are seeking qualified, end to end manufacturing partners rather than standalone material suppliers.

Progress on this segment has been tangible. Construction of the PM HIP capability began in 2024, and by December 2024 Amaero received AS9100D accreditation for its Chattanooga facility, formally covering PM HIP production. This accreditation is a critical requirement for aerospace and defence manufacturing and significantly broadens the addressable customer base.

More recently, Amaero disclosed a A$1.1 million contract covering PM HIP manufacturing and testing of components for the submarine industrial base. This contract provides early commercial validation of the technology and demonstrates real demand beyond pilot scale work.

United States Department of Defense Endorses PM-HIP

Importantly, the United States Department of Defense has also issued a letter of support recognising PM HIP as a viable alternative to traditional casting and forging methods for the maritime industrial base. This endorsement is meaningful. It highlights PM HIP as a strategically relevant manufacturing pathway and supports the long term role of the technology in modernising defence supply chains, particularly where performance, material efficiency, and domestic manufacturing capability are critical considerations.

Pitt Street Research Directors owns shares in the company discussed. This article reflects personal views and is not financial advice.