26. May 2021 | 11:53 CET
BYD, Carnavale Resources, NIO - Now into the megatrend
Without question, electromobility will be one of the future industries in terms of the energy transition. Car manufacturers are already vying to determine when the final switch from combustion engines to purely electric cars will occur. In Germany alone, around 12 million e-vehicles will be rolling along the roads in 2030. With the switch to electric-powered vehicles, demand for the necessary raw materials is also rising. The high level of interest offers enormous opportunities to participate in the trend, which is still in its infancy.
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ISIN: CNE100000296 , AU000000CAV5 , US62914V1061
Metals in demand as never before
To produce a battery for an electric car, you need metals such as lithium, nickel, cobalt and rare earth metals. Elon Musk noticed years ago that these were becoming increasingly scarce due to rising demand and called on mining companies to produce more nickel. In return, the Tesla founder beckoned with huge contracts over a long period of time. The trade war between China and the US has made the situation even more dramatic because of the shortage. 80% of lithium production takes place in China. Due to the high domestic demand and planned export stops to the USA by the Middle Kingdom, Western car manufacturers could face the same situation as with the current chip shortage. The consequence would be production stops and the closure of plants. To ensure supply chains, the USA, Japan, Australia and India are now trying to set up new projects outside China, but this is hardly feasible under a 10-year timeframe.
Carnavale Resources, a Western Australia-based company, has been focused on economic changes for some time. The mineral exploration company focuses on acquiring and exploring high-quality and advanced exploration and development projects with prospects for gold, nickel, platinum, copper and strategic minerals related to the electric battery sector, including other emerging technologies. There are currently four projects in Carnavale's portfolio, focusing on the Kookynie gold project and the Baracuda project with platinum, nickel, and copper deposits.
The Kookynie region has historically produced more than 650,000 ounces of high-grade gold from quartz vein deposits dating back to the late 19th century. Kookynie is located 60 kilometers south of Leonora and has had limited exploration. Several gold anomalies and structural features have already been identified on the project in the first two phases of aircore drilling, including 256 holes for 12,506 meters. The third phase of drilling is now targeting known anomalies at the McTavish East, Champion South and McTavish North mines. Previous drilling at these mines has identified high-grade, structurally controlled gold mineralization intersecting up to 16.25 g/t gold. Results from drilling here are expected in June.
The second flagship is the Barracuda project, where historical drilling has revealed striking platinum mineralization 8.27 g/t PGE. Mineral explorer Pancon held exploration licenses for most of the Windimurra Igneous Complex between 1985 and 1990. This highly prospective area has the potential to host significant platinum, palladium, nickel and copper sulphide deposits and has not received attention since Pancon's 1,811m diamond drilling in 1986. It was not until 2016 that platinum sulfide minerals were identified in the rocks by the Western Australia Geological Survey.
Carnavale Resources wants to start fieldwork here as soon as possible with the latest technology to raise the project's potential. The Australians also intend to continue evaluating interesting exploration and development projects. The market capitalization is currently EUR 10.57 million. In addition to its home stock exchange in Sydney, the share is also traded in Germany.
NIO plans to double production
The plans of the Chinese electric car manufacturer NIO are ambitious. The existing contract with its production partner Jianghuai Automobile has been extended until 2024, and an agreement has been reached to double capacity to 240,000 units per year. As NIO only recently cut its production to 7,500 units due to the current acute chip shortage, this comes at a surprising time. JAC will continue to build the ES8, ES6, EC6 and the announced ET7 sedan, possibly adding new models to the lineup.
NIO, which was on the verge of going out of business last year due to financial problems, received billion-dollar financing from financial institutions in Anhui province, with the condition that it set up a plant in Hefei, the provincial capital. From a chart perspective, the NIO share price successfully defended the critical resistance area at USD 30. Currently, the stock is trading at USD 36.50, with the next hurdle being the USD 40 mark.
After the bitter price losses in recent weeks, the Chinese market leader BYD is fundamentally on the upswing. After the sound barrier for the production of one million plug-in cars was broken last week and the start of the European expansion to Norway was announced, yesterday came another positive announcement concerning the e-bus division.
Thus, the Warren Buffett-backed Company is supplying 30 electric buses to the Madrid Municipal Transport Company. In total, the tender amounts to 50 buses. The stated goal in the Spanish capital is to eliminate the diesel-powered fleet by 2023, with 100% of the vehicles being clean and operating within the current environmental sustainability strategy 'Madrid 360'. In addition to Madrid, BYD is also responsible for procuring electric buses for the cities of Badajoz, Barcelona and Valencia.
From the price low at under EUR 14, the BYD share was able to free itself significantly and quoted at EUR 18.05. At EUR 19, the next stronger resistance is waiting. In the long term, we are convinced of the "Build Your Dream" Company and see BYD as the most promising e-car manufacturer from the Middle Kingdom.