June 23rd, 2021 | 14:03 CEST
BHP, Glencore, NewPeak Metals - Scarce, scarce and sold out!
Table of contents:
"[...] 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
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
BHP Billiton - Potash for higher agricultural yields
The world's population is increasing at a constant rate of about 8% per annum, creating a huge demand for fertilizers and growth accelerators on the food side. But, of course, the weighing up of the how and with what is being discussed today with entirely different content than it was 20 years ago because the blue planet is supposed to become much "greener" and agriculture in particular still has a giant leap forward in terms of climate protection.
The world's largest mining Company, BHP, estimates that its current potash project in the province of Saskatchewan will cost up to USD 5.7 billion in the first phase. It offers BHP diversification into agricultural markets, as potash is a key element in plant nutrition and makes crops much more drought resistant. BHP expects the potash project to take another 5 years to develop and will have an annual production capacity of about 4.4 million tons in the first phase. When fully developed, the plant will have the capacity for an additional 12 million tons, with a lifespan of a full 100 years. Demand is expected to increase by 15 million tons to about 105 million tons, or 1.5% to 3% per year, by 2040. That would make BHP a major player in the market.
BHP shares are a standard stock among commodity stocks. Because of its diversification, the Company is currently gaining on many shortages. A 5% dividend is on top of that. Hold!
Glencore - The world's largest cobalt mine
Under a not-so-green flag and much criticism is the topic "cobalt." The raw material is very rare but occurs abundantly, especially in Africa. One of the claim owners is the largest commodity trading company Glencore.
It has now been announced that the Company could restart the giant Mutanda copper and cobalt mine in the Democratic Republic of Congo (DRC). The mine had been on hold for two years due to regulatory and political issues, with Glencore itself shutting down operations in 2019 due to low cobalt prices. According to officials, the new Minister of Mines and Mining Antoinette N'Samba Kalambayi met with representatives of the Swiss group in June to discuss restarting the mine in 2022. An ambitious target, given the history of cobalt production in Africa.
Mutanda is one of the world's largest cobalt mines, with 20% of the global market. With their reopening, the Swiss are presumably responding to the sharp increase in demand for battery metals, as the world's major automakers increasingly rely on metal-intensive electric vehicles. Copper and cobalt are critical metals for high-tech manufacturers.
Glencore shares have been trapped between EUR 3.40-3.70 for several weeks, with the price still digesting the doubling since March 2020, but operating figures will push the price higher. Grab below EUR 3.50!
NewPeak Metals - There could be a jolt soon
The rumor mill is bubbling at the Australian explorer NewPeak Metals Ltd (NPM). The Company has several gold-silver, oil-gas and tungsten projects with significant geographic diversification. These are located in Australia, New Zealand, Argentina and Finland.
NPM owns a hot asset with its 30% stake in Lake Blue Energy, as the moratorium imposed on onshore gas exploration in the Australian state of Victoria ends in early July. The stock has now been suspended for a good 1 year and is expected to resume trading soon. The stake in this asset alone covers the current market capitalization of NPM stock. The potential is estimated to be much higher as the energy hunger of the distant continent is increasing every year. It is a good lottery ticket for the still small Company.
But NewPeak has even more to offer: In Bergslagen, Sweden, initial exploration has added tungsten to the metal portfolio, a strategically important and rare metal. The acquisition of further southern Finnish gold concessions from Sunstone Metals has also been successfully completed.
NewPeak Metals will probably need another capital increase this summer to manage all projects in a meaningful way. In our view, this would be an excellent opportunity to position itself. The share price in Australia has been between AUD 0.002 and 0.003 for a few weeks, which means that the current market capitalization reaches AUD 10-15 million. The next few months should bring a significant improvement in value.
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