June 7th, 2022 | 12:53 CEST
Access. How companies are poaching in Africa: BYD, Almonty Industries, JinkoSolar
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
BYD secures lithium in Africa
The BYD share is on the upswing again - the value has been running for months. Most recently, the announcement of the Chinese to take over six lithium mines in Africa caused a sensation. The lithium is to cover the carmaker's needs for a whole ten years. In total, 25 million tons of lithium oxide are to be produced. The price of lithium has risen steadily in recent months.
Many carmakers already fear price pressure. On the other hand, companies like BYD that invest in promising mines hedge against rising prices and are even earning a share of the lithium hype. BYD is traditionally a company that also likes to cover adjacent areas of the value chain. In addition to its batteries, the automaker also manufactures chips. The share has broken out to a new three-year high. For BYD, on the one hand, but also for all growth stocks, this is a good sign.
Almonty Industries: Tungsten as a technology metal
A share that is also said to have great potential is Almonty Industries. The tungsten producer is currently developing the gigantic Sangdong mine in South Korea. The Company expects to receive the final permits at the end of 2022, enabling it to ramp up the project to full capacity in the medium term. "Our full capacity is 1.2 million tons of rock, while we will only process a little more than half at the beginning. The reason lies in our experience with tungsten. We have one of the most experienced teams there is in the world. For this reason, we know that sometimes it is better to walk first and then run. Once we see that everything is running smoothly, we will expand the capacity. That is the better approach and costs significantly less if there are teething problems initially," Almonty CEO Lewis Black commented on the measures in an interview a few months ago.
Tungsten is considered a challenging metal where many a mine operator has positioned itself incorrectly. Almonty has years of experience with tungsten and produces the metal in Portugal. In recent years, tungsten has morphed from an industrial to a technology metal. It now plays a role in semiconductors and batteries in addition to light bulbs. "Where there was cobalt before, there will be tungsten in the future. Tungsten is extremely heat resistant and offers advantages in terms of both battery charging performance and safety. Also, tungsten allows more nickel to be incorporated into batteries for e-cars, which in turn extends the range," Black said. In South Korea, battery technology has already turned away from cobalt. Elsewhere, too, the issue of safety, in particular, is gaining traction. Almonty's stock may have seen its lows.
Analysts drive JinkoSolar
Likewise, JinkoSolar's success is not conceivable without commodities. Most recently, analysts at Oppenheimer gave the solar sector a tailwind, predicting a three- to five-fold increase in sales over the next decade. In the meantime, JinkoSolar's stock has broken out to a new high for the year. In the long term, the energy transition could boost the value further. However, investors should keep in mind that even renewable energy cannot do without raw materials.
To invest successfully these days, investors can target all stocks that are currently building momentum. In the second step, companies that are suitable suppliers in times of scarcity could play a role. With the largest tungsten mine outside of China, Almonty Industries has a hot iron in the fire. The share from the second tier belongs on every watchlist!
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