13. July 2021 | 10:05 CET
Bayer, Almonty Industries, Daimler - Shortages without end
The shortage of semiconductors weighs heavily on the auto industry. According to a study by the Duisburg-based Center for Automotive Research, it will be responsible for the loss of production of around five million vehicles this year alone. An end to the chip shortage is not yet in sight. Meanwhile, the next crisis due to the lack of raw materials is already just around the corner. Due to the rapid growth in electromobility, the high demand for lithium-ion batteries means that the next failures are pre-programmed.
time to read:
ISIN: BAYER AG NA O.N. | DE000BAY0017 , ALMONTY INDUSTRIES INC. | CA0203981034 , DAIMLER AG NA O.N. | DE0007100000
"[...] 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
Daimler and the bottlenecks
In the plants in Bremen, Rastatt and Kecskemét in Hungary, the assembly lines continue to run. Still, due to the global supply shortage of chips, Daimler has to stop production again at the plant in Sindelfingen. "It is currently not possible to forecast when the bottleneck will be resolved in the year", a Daimler spokeswoman said.
Daimler boss Ola Källenius is pressing hard on the gas pedal in the switch from internal combustion engines to electric cars. Accordingly, he plans to largely dispense with internal combustion engines by the end of this decade. Every model series will then have a fully electric version. Sales and structures will be transformed into a business without diesel and gasoline engines.
Changeover leads to excess demand
If the forecasts of Ferdinand Dudenhöffer's Center for Automotive Research in Duisburg are to be believed, the next bottleneck after the shortage of semiconductors is already just around the corner. Currently, the major automakers are investing in their factories for batteries, but according to Dudenhöffer's study, this is coming too late. By 2026, the consequence could be that almost five million fewer cars will be produced than would be possible without a shortage of batteries.
The shift to a low-carbon society fundamentally leads to excess demand for raw materials such as nickel, lithium and cobalt. Another complicating factor for the Western industrial world is that nearly 80% of the production of these metals takes place in China. The Middle Kingdom, which is currently engaged in a trade conflict with the USA, wants to satisfy the increasing domestic demand according to the motto "China First" and protect the strategic resource amidst intensifying global competition.
A similar problem can be seen with the strategic metal tungsten. China excels in producing 85% of the global market, and deposits ex-China are scarce. With a density of 19.25 g/cm³, tungsten is the heaviest technical material and has the highest melting point of all metals at 3,410°C, as well as a boiling point of 5,700°C. Due to the unique properties of tungsten, tungsten alloys and some tungsten compounds listed above, the metal is irreplaceable in many vital applications in various fields of modern technology.
A solution from South Korea
Almonty Industries, which has a long history of mining and processing tungsten with mines in Spain and Portugal, is now about to hit the big time. With the expected financial closing for the construction of the world's largest tungsten mine, the Sangdong Mine in South Korea, Almonty Korea Tungsten, a subsidiary, will in the future be responsible for 50% of the world's tungsten supply outside China when operating at full capacity. The groundbreaking ceremony took place around four weeks ago, and a buyer for the tungsten concentrates to be produced was also found in the Austrian Plansee Group for the next 15 years.
The final condition precedent to the closing of the financing, which KfW-IPEX Bank GmbH is bearing to the tune of USD 75.1 million, is an equity increase with required net proceeds of around USD 10.1 million. By the end of last week, a corresponding placement with a volume of USD 11 to 18 million was underway, accompanied by the start of trading in Australia. Thus, the publication of the results should be expected soon.
The analyst firm First Berlin Equity Research recently confirmed its buy recommendation for Almonty Industries in a study update and left the price target at CAD 1.55. On the stock exchange, one share certificate is currently worth CAD 0.98.
The pharmaceutical giant Bayer received a positive result from the US Food and Drug Administration (FDA) for the renal drug Finerenone, marketed under the brand name Kerendia. The Leverkusen-based company announced that the drug is approved to lower the risk of a sustained decline in the estimated glomerular filtration rate, kidney failure, cardiovascular death, non-fatal myocardial infarction, and hospitalization for heart failure in adult patients with chronic kidney disease and type 2 diabetes. According to Bayer, more than 160 million people live with chronic kidney disease and type 2 diabetes.
Despite the positive news, the stock is battered on the chart. A fall below the EUR 50 mark is likely to result in a sell-off towards EUR 45.
The shortage of raw materials and supplies is likely to remain a problem for the industry in the coming years. The energy transition will inevitably lead to excess demand in sectors such as electromobility and renewable energy. The beneficiaries of the scarce goods are raw material producers such as Almonty Industries. By contrast, automakers like Daimler face a Herculean task.