September 2nd, 2022 | 10:12 CEST
BYD, Globex Mining, Tesla - Run on commodities!
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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
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BYD - Production chain secured thanks to raw materials and minerals
China is ideally positioned for the mammoth task of switching from fossil fuels to renewable and clean energies. The country possesses the necessary raw material resources to manufacture, e.g. batteries for electric vehicles of BYD. Also, for the extraction of the minerals, China has the energy resources to independently carry out the production and transformation. However, mineral extraction and processing for the energy transition is energy intensive due to dwindling resources and generates higher emissions to produce the same amount of products.
Beijing must decide whether to prioritize short-term economic stability or longer-term carbon emissions reduction goals. Markets are betting that a focus on the former will prevail. The gains in coal stocks also follow the global outperformance of oil, gas and mining stocks.
BYD CEO Wang Chuanfu has already made up his mind. By investing in key industries such as lithium and chip production, the Company has gained an advantage. It can produce the necessary components independently. The BYD share has been a big winner over the past 10 years, with an average return of 36% per year. Sales are also up: BYD tripled its electric vehicle shipments in the first half of 2022 to 641,350.
Globex Mining - Commodity mix as a portfolio supplement
Given the aftershocks in many companies' production chains from the Covid-19 pandemic, the question for investors is which stocks will continue to generate growth without dynamic interruptions from wars of aggression, drought or flood disasters. Focusing on one commodity or mineral in the process increases investment risk.
Globex Mining offers a possible alternative of broad diversification in this area. The Company works by purchasing mineral properties, upgrading them through exploration, options or joint ventures, developing them to production maturity or, in some cases, selling projects directly.
Over 200 property packages with mineral resources, mineral deposits, and reserves are owned by Globex Mining. The properties are located in both Canada and the United States. Over 60 years of experience in the resource industry distinguishes Globex Mining's management team.
CEO Jack Stoch is well positioned with this business model, providing shareholders with a never-ending source of minerals and commodities. Globex Mining recently acquired 100% of the Pointe-Aux-Morts dolomite deposit in Quebec. The site is estimated to have 23.4 million tons grading 20.5% magnesium oxide, 30.5% calcium oxide and 0.92% silica. Magnesium oxide is used for water treatment, and calcium oxide, among others, in the building materials industry.
Those who want to learn more about the strategy can watch the CEO's presentation at the IIF on Sept. 27 via Zoom.
Tesla - End users generate power for California's overall grid
An extreme heat wave is hitting the Sunshine State of California. The picturesque state on the US West Coast and home of Tesla could be at risk of blackouts for the first time. Temperatures are rising in California, leading to increased electricity consumption. In order to ease the strain on the power grid, the local grid operator is asking the population to reduce electricity use between 4 and 9 p.m. during the week. "The reality is that we live in an era of extremes - extreme heat, extreme drought, extreme flooding," clarifies Governor Gavin Newsom to the press.
California is also the home of Elon Musk. The future of grid stability may depend on homeowners with Tesla Powerwalls to provide electricity during peak demand. In a beta test, Tesla owners with Powerwall charging stations are helping to build the world's largest distributed battery system. Tesla's Virtual Power Plant (VPP) program offers participating homeowners a USD 2 per kWh payment. Tesla estimates that Powerwall owners receive approximately USD 10 to 60 for each VPP event. With more than 3,500 homes participating, the VPP provided up to 51 MW of power to California's total grid at the most recent event. And Musk continues to expand. The next VPP program is starting in Japan.
Tesla customers are becoming power generators and being paid to feed energy from their powerwalls into the California power grid. Extreme weather conditions are increasingly causing power fluctuations in the state. This is how Elon Musk emphasizes the brand power of his EVs. The in-house energy generation program is now being exported to Japan. In the battle for raw materials, BYD has secured the production chain for its autos thanks to its forward-thinking CEO. More than that, BYD is also selling electric batteries to Daimler. Adding companies like Globex Mining to your portfolio in these times directly adds a diversified commodity mix to your portfolio. The experienced team is successively acquiring new areas with rich mineral resources, from uranium to lithium, gold, copper and calcium oxide. The pandemic has shown how fragile supply chains can be. All the better to start at the beginning of the supply chain.
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