North Korea's Ammunition Trade: A Geopolitical Commodity Play

The Russia-Ukraine conflict has become a proving ground for global supply chain resilience—and now, it's also a staging post for a geopolitical commodities play. North Korea's clandestine role in supplying Russia with critical ammunition has upended sanctions dynamics, disrupted defense supply chains, and created an overlooked opportunity in strategic commodities like tungsten and copper. Investors should pay close attention to this axis of cooperation as it reshapes risk and reward in global markets.

The North Korea-Russia Ammunition Pipeline: A Tungsten and Copper Story

By mid-2025, North Korea had supplied Russia with an estimated 12 million artillery shells, including 152mm and 170mm rounds, along with ballistic missiles like the Hwasong-11. These munitions rely heavily on tungsten (for armor-piercing cores) and copper (for shell casings and electrical components). While North Korea has limited reserves of these materials, its ability to source and process them at scale has been a key enabler of its role as Russia's “arsenal of the Eastern Front.”

The supply chain mechanics are complex but revealing. Tungsten is mined in North Korea's Hamgyong provinces and refined using Russian or Chinese technology. Copper is sourced partly through illicit ship-to-ship transfers in the Sea of Japan, evading sanctions via opaque trading networks. This creates a geopolitical arbitrage opportunity: investors in tungsten and copper could benefit as global supply chains tighten, even as Western nations scramble to counteract this illicit trade.

Sanctions Erosion and the Commodities Risk Premium

The Russia-North Korea partnership is a direct challenge to the sanctions regime. By mid-2025, Russia had bypassed UN restrictions to supply North Korea with $9 million in unfrozen assets and advanced military tech, while North Korea's shipments of ammunition to Russia have effectively doubled Moscow's artillery capacity. This cooperation undermines the efficacy of sanctions, creating a geopolitical risk premium for commodities tied to defense production.

Investors should note two trends:
1. Tungsten scarcity: Global tungsten reserves are concentrated in China (60%), Russia (15%), and Africa. North Korea's production, though small, adds to supply uncertainty.
2. Copper demand spikes: Defense spending (e.g., artillery shells, missiles) now accounts for ~7% of global copper demand, a figure likely to rise as conflicts persist.

Market Implications: Play the Commodity, Not the Conflict

For investors, the key is to avoid direct exposure to sanctioned entities while capitalizing on the commodities underpinning this arms trade. Here's how:

1. Tungsten: A Stealth Play

• ETFs: Consider the Global X Tungsten ETF (TWST), though it's thinly traded. Alternatively, invest in diversified miners with tungsten exposure.
• Stocks: Companies like Wolframite Resources (hypothetical example) or Lundin Mining (which has tungsten byproducts) could see price support as defense demand rises.

2. Copper: The Indirect Hedge

• ETFs: The iShares Copper ETF (IPC) offers broad exposure.
• Miners: Freeport-McMoRan (FCX) and Southern Copper (SCCO) are major producers; their stocks often rise with defense-driven demand.

3. Defense Logistics Firms: The Middlemen

• Companies like Delek Group (DELE), which handles bulk commodity shipping, or logistics giants like Maersk (MAERSK-B) could benefit from the need to move strategic materials discreetly.

4. Sanctions Enforcement Tech: The Compliance Play

• Firms like Chainalysis (blockchain monitoring) or Compliance.ai (sanctions screening) may see increased demand as governments try to track illicit shipments.

Hedging Against Geopolitical Upheaval

The North Korea-Russia axis also introduces risks. Investors should:
- Avoid Russian-linked equities: Sanctions could expand, hitting stocks like Gazprom (GAZP).
- Short the ruble: If the partnership strains Russia's economy further, the ruble could weaken.
- Diversify into safe-haven metals: Gold (GLD) remains a hedge against systemic instability.

Conclusion: A New Arms Race, a New Commodity Cycle

North Korea's role in arming Russia isn't just a geopolitical footnote—it's a catalyst for shifts in commodity markets. As tungsten and copper become critical to conflict economies, investors ignoring these trends risk missing out on asymmetric gains. The playbook is clear: buy the commodities that underpin this war machine, while shorting the regimes that enable it. The next phase of geopolitical risk is here—and it's priced in the periodic table.