December 13th, 2021 | 12:12 CET
BYD, Manganese X Energy, Daimler - Enormous demand for Tesla, BYD and NIO
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"[...] Nickel, therefore, benefits twice: firstly from its growing importance within batteries and secondly from the generally growing demand for such storage. [...]" Terry Lynch, CEO, Power Nickel
Everything is getting more scarce
Months ago, we were already more than skeptical concerning a short, crisp increase in inflation, which is expected to cool down again from spring 2022. Corona or not. Supply chain disruptions are a major impediment to the recovery of the global economy. Shortages, from raw materials to semiconductors and the end products that depend on them are becoming more dramatic rather than recovering. Companies are sitting on full order books but are getting the raw materials they need at horrendous prices, if at all, which in turn puts pressure on margins. In addition, the relationship between China and the rest of the world remains critical. In the case of essential raw materials for achieving climate targets, such as lithium, rare earths and manganese, dependence on the Middle Kingdom is overwhelming at up to 80%.
The West is challenged
It takes up to 10 years to build up new production facilities. The western industrial nations are challenged to cushion the dependence on China, at least in the medium term. As early as February of this year, the US government issued an order to secure all North American supply chains for all materials of strategic importance. That includes the transition metal manganese, which is needed as a key element in producing lithium-ion batteries. The price of manganese flake has exploded in the last twelve months and is the highest since 2010.
Only player in North America
Demand is rising, but supply is almost non-existent. Manganese X Energy wants to fill this white space and become the only North American manganese producer. In New Brunswick, about 10km from the US border, lies the 100% owned 1,407 hectare Battery Hill concession area. From historical work, it is believed to contain ribbon ore formations that could collectively contain the largest source of manganese in North America at approximately 194 million tonnes.
The initial mineral resource estimate for the Battery Hill project was released in July and indicates 34.86 million tonnes of proven and indicated mineral resources at a manganese grade of 6.42% and 25.91 million tonnes of suspected mineral resources with a manganese grade of 6.66%. By defining the inventory of Proven and Indicated Mineral Resources, the Canadians aim to move quickly towards an initial economic calculation in 2022. Following the PEA, which is expected to occur in the first half of 2022, management intends to move promptly to prepare a pre-feasibility study, which will include the creation of reserves. Until then, additional drilling programs will be targeted.
In addition to the unique Battery Hill project, the Canadians also have a graphite property and the Peter Lake nickel-cobalt project. With the subsidiary Disruptive Battery, there is another asset in the portfolio of Manganese X Energy, not assigned to the core business. The Company has excellent development potential due to its unique selling proposition as the only player in North America.
On to Scotland
The Chinese technology company BYD is best known for its electric cars. Alongside this, the global delivery of electric buses, which are also based on blade battery technology, continues apace. In addition to orders from the USA and Spain, further buses were sold in cooperation with the British bus manufacturer Alexander Dennis Limited, this time to Scotland.
12 Enviro400EV battery-electric double-deckers were delivered to Dundee bus operator Xplore Dundee. The vehicles are 10.8m long, and their range is estimated at around 257km. The British government is giving enormous support to transform public transport to buses with alternative drive systems and plans to put 4,000 new battery and hydrogen buses built in the UK on British roads in the near future.
At the end of last week, some Daimler investors may have flinched briefly, as the share price was down around 15% on the previous day. However, the decisive factor was not a price drop but the successful spin-off of the Daimler Truck subsidiary. Daimler shareholders received one share of Daimler Truck for two Daimler shares. The parent company remains a major shareholder after the IPO, with a quota of 35%.
Analysts at Canadian investment bank RBC reiterated their Outperform rating following the spin-off of the truck division. The previous price target was EUR 108.
Inflation continues to rise to record levels, and the word "temporary" is banished from the FED's vocabulary. Due to the energy transition, the demand for the required raw materials is enormous. Manganese X Energy should benefit from the development as the only future manganese producer. The demand for electric vehicles should also continue to provide BYD and Daimler with full order books.
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