March 29th, 2022 | 10:20 CEST
Alarm bells ringing: Shares of Nel ASA, K+S and Almonty Industries take off
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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
Almonty: Does new cooperation lead to a breakout?
The Almonty share has developed positively in recent weeks, and now the chart breakout could finally succeed. The latest cooperation of the tungsten producer in South Korea could ensure this. Since July 2021, the share has traded between EUR 0.73 and EUR 0.56. Now it is trading at EUR 0.73 again, and the chances of further rising prices are good. In addition to the momentum from rising tungsten prices, Almonty reported new cooperation in South Korea yesterday. The partners are the state-owned Korean Mine Rehabilitation and Resource Corporation (KOMIR) and the Company Hannae For T. KOMIR is the Korean government agency responsible, among other things, for the security of Korean mineral resources. One of KOMIR's strategic goals is to improve Korea's access to critical and other minerals. Hannae For T specializes in extracting rare raw materials from recycled products. The partners will conduct a feasibility study on rare metal recycling. Almonty plans to use the recycling process to further process the resulting materials into nano-tungsten oxide and other important products for the Korean semiconductor and battery sectors. The cooperation shows how scarce raw materials are and that more and more governments are addressing the issue. The EU, for example, has already placed tungsten high on its list of critical raw materials.
Due to its outstanding properties, tungsten is indispensable for the modern high-tech industry. In electromobility, tungsten is on its way to overtaking the environmentally harmful cobalt. The problem: China has a quasi-monopoly with a market share of around 85% of global tungsten production. It is here where Almonty comes into play. The Canadian Company - a major shareholder with about 12.2% is Deutsche Rohstoff AG - is currently building the world's largest tungsten mine. The Sangdong mine in South Korea should start operations from the end of the current year and reduce the West's dependence on China. The project is fully financed. Among other things, a KfW loan has been secured. The Sangdong mine also offers additional potential thanks to a larger molybdenum deposit, which will be explored in greater detail this year. Almonty Industries already operates mines in Spain and Portugal. Given the price development, margins should increase there. Further information can be found in a study on researchanalyst.com researchanalyst.com/en/report/almonty-industries-inc-and-the-wires-are-glowing.
K+S: Share is unstoppable - Analysts skeptical
There is no stopping the K+S share at the moment. K+S belongs to the top group of international fertilizer producers and significant competitors from Belarus and Russia. Accordingly, supply on the global market is currently limited, and the price of potash is high. At the German trading centers, a ton of potash currently costs more than EUR 900. A year ago, it was still less than EUR 250. Therefore, it is not surprising that the K+S share has almost doubled this year alone and is now quoted at EUR 30. The price chart shows a threatening flag pole. But on the other hand, the P/E ratio is still in the single digits; however, analysts are becoming more skeptical.
All price targets are now below the current price. Most recently, Baader Bank confirmed its buy recommendation for the K+S share on Friday. According to analysts, potash prices in Central and South America are also rising significantly. As long as the Ukraine war and sanctions against Russia continue, the fertilizer market will remain tight. However, the share has already reached Baader's price target of EUR 30. Four other analysts commented on K+S in March. All price targets are below EUR 30. However, if potash prices continue to rise, earnings estimates and thus price targets could have room to grow.
Nel ASA: Capital increase weighs on share price
The Nel share has taken a breather in recent days. On the one hand, this is relatively healthy after the price increase from EUR 1.10 to EUR 1.80. On the other hand, a capital increase weighs on the share price. Last week, 98 million shares were placed at NOK 15.30 - around EUR 1.61. In addition, another 10 million shares could be placed at the same price. Operationally, Nel is currently making progress on the topic of green hydrogen. Yesterday, for example, the Company reported another order in this segment. Nel is to deliver an alkaline electrolyzer system for the production of green hydrogen to a European company. The customer then intends to offer the green hydrogen within Europe. The order volume is EUR 3 million. Further details about the customer or the order were not disclosed. In mid-March, Nel had already reported a EUR 2 million order for an alkaline electrolyzer system. Solar Foods intends to use green hydrogen as energy for food production. The orders are small but strategically important. Nel had announced that the alkaline electrolyzer system should make it possible to produce green hydrogen at competitive prices.
Raw material prices remain volatile. Nel must digest the capital increase first, but remains a leading pureplay in the hydrogen sector. The Almonty share has just jumped. K+S is currently almost unstoppable, but the air is getting thinner at a price of EUR 30, and analysts would have to raise their price targets.
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