November 23rd, 2021 | 13:02 CET
BYD, Noram Lithium, Siemens Energy - Door to door with Elon
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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
In demand and in short supply
As an essential component of lithium-ion batteries, lithium is currently one of the most sought-after raw materials of all. In addition to battery production, lithium is primarily used in glass and ceramic production. The cumulative share of the quantity of lithium used worldwide for this application area amounts to more than 30%. For the electrical industry, the raw material is the most important component of long-lasting batteries as an electrode material. Due to scarcity and overheated demand, prices have risen enormously in recent years. The trend is expected to continue in the coming years, as the transformation in the automotive industry is only just beginning.
The search for producers
With 51,000t, Australia was by far the most important lithium supplier in 2018 - ahead of Chile with 16,000t, China with 8,000t and Argentina with 6,200t. The US currently faces a gap in the production of the scarce commodity. Annual sales of passenger electric cars alone in the US are projected to exceed 224GWh of lithium-ion cell production capacity in 2025. The President of the United States sees the gap and, through his infrastructure plan, promotes not only the renewable energy sector, such as wind and photovoltaics but also the electric mobility industry.
Noram Lithium, a company that has received little attention to date, is likely to benefit from this. Geographically, the location of the project is prime. The 11.33 sq km 100% owned property is located halfway between Las Vegas and Reno. It is only 2 km from Albemarle Corporation's lithium brine production operations and Silver Peak Mine, a lithium mine that has been producing for decades. As an aside, the Zeuss lithium project is not far from Tesla's Gigafactory.
The first economic feasibility study for production is expected to be completed this year at the project in Nevada's Clayton Valley. The project's current resource estimate includes approximately 363 million tons of rock with a lithium grade of 923 ppm. From that, 827 million tons of additional resources are inferred with a lithium grade of 994 ppm. Noram Lithium's goal is to develop the Zeus lithium project into a commercially viable resource and a low-cost supplier to the emerging lithium battery industry. The Canadians' long-term vision is to build a multinational, lithium-dominated industrial minerals company that produces and sells lithium in Europe, North America and Asia.
With a market capitalization of EUR 41.32 million, Noram Lithium's stock has not yet run hot, unlike its peer group. However, the chart of the share, which is also traded in Frankfurt, shows a steady upward trend.
Breakout from the triangle
The demand for lithium is best seen by taking a closer look at the charts and sales figures of the leading automotive producers. In addition to Tesla, which is nevertheless rushing from high to high despite the sale of a larger block of shares by CEO Elon Musk, the Chinese company BYD can also shine. With the breakout from a rising triangle, the chart generated a new, striking buy signal.
An increase in the target price by the analysts at Daiwa Securities ensured a good mood among shareholders, including investor legend Warren Buffett, who has been involved for several years. Analyst Kelvin Lau raised the outlook for the Build Your Dream company from the equivalent of EUR 43.59 to the current EUR 49.64.
The shares of Siemens Energy were also showered with buy recommendations. In contrast to BYD, the share of the Munich-based company did not experience an aha effect and continued to move south with a minus of 1.6% in the course of the day to a level of EUR 23.93. The next target should be the chart support zone around EUR 23.50.
Both Berenberg, Jefferies and Deutsche Bank rated a buy sign on the share. Deutsche Bank analyst Gael de-Bray continues to consider the papers massively undervalued after an investor event with the CFO and reiterated his price target of EUR 30.
Politicians are exerting pressure concerning climate change. Strong demand in the electric mobility sector should benefit lithium companies such as Noram Lithium. The BYD share benefited from a positive analyst assessment, while the experts' recommendations fizzled out at Siemens Energy.
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