25. January 2021 | 07:35 CET
BYD, Royal Helium, Bayer - it's getting tighter and tighter!
Who will prevail in the battle for the crown in the electric car business? According to experts, the innovation leader Tesla has a technical lead of two to three years. In contrast, the Chinese government supports domestic carmakers such as BYD, NIO and Xpeng with financial injections to achieve climate policy goals in the country. The first winners are already in place. Because of the arms race, there is an extreme demand for the necessary raw materials. In the next few years, there is a threat of severe scarcity and thus dramatically rising prices.
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ISIN: CA78029U2056 , CNE100000296 , DE000BAY0017
"[...] We expect the first three wells to be drilled, cased, completed and tested by the second week of March [...]" Andrew Davidson, CEO, Royal Helium Limited
Significant increase in demand
By 2050, 80% of all newly registered passenger cars worldwide could be on the road with alternative drive systems, or even 100% if ambitious climate protection targets are met. As the number of electric vehicles increases, so does the global demand for batteries. Assuming that the Paris Climate Agreement targets are implemented in the mobility sector, we expect demand for lithium, cobalt, and nickel to increase significantly by 2030. The development of rare earth metals is just as dramatic. Permanent magnets for electric motors are manufactured based on rare earth metals. In ten years, experts predict that demand for rare earth oxides for use in magnets will rise from currently USD 2.98 billion to USD 15.65 billion.
Health sector booming
According to experts at the German Federal Institute for Geosciences and Natural Resources (BGR), helium, the most abundant element in the universe besides hydrogen, is also facing a crisis. In the past two years, the supply has become noticeably scarcer and this development could continue in the future. The European Union has defined helium as a strategically important raw material. It is increasingly needed in the healthcare sector, such as for magnetic resonance imaging (MRI) scanners, particle accelerators, space travel, and construction of quantum computers. Therefore, it is all the more surprising that there are few listed helium players in contrast to hydrogen companies.
Share takes off
One Company that has caused a sensation in recent weeks is the Canadian Company Royal Helium. Royal Helium has access to 400,000 hectares of promising helium land in southern Saskatchewan, Canada, making it one of the largest helium leasing companies in North America. As a result, the share price rose from EUR 0.20 at the end of December to EUR 0.60 at its high. Currently, the share price is correcting somewhat and is presently quoted at EUR 0.49. However, the substantial rise in the share price is fundamentally justified. Royal Helium was able to close a significantly oversubscribed placement of CAD 6.15 million at the end of the year. The proceeds were immediately invested in the new drilling program for the Climax project and a three-well program was initiated in mid-January. Management expects results from the first drill holes within the next four weeks. The goal of the Company management is to increase the portfolio in 2021 significantly.
Fresh money for growth
Chinese automaker NIO led the way last week. The Company raised fresh money with two bonds totalling USD 1.5 billion. The two convertible bonds, worth USD 750 million each, mature in 2026 and 2027, respectively. Now the Warren Buffett-backed Company BYD is following suit. The sharply increased share price, peaking at over 400%, was used to secure USD 3.9 billion on the capital market by issuing new shares. BYD intends to use the raised capital for research and development and debt reduction, among other things. Competitor Xpeng raised USD 2.5 billion in the same way.
Here we go again
One had the feeling that some calm had returned to pharmaceutical giant Bayer concerning the glyphosate trial. The cooperation with the vaccine manufacturer CureVac and the expansion of the gene and cell therapy area with 25 new collaborations in 2020 promised a rosy future. Now, however, the Leverkusen-based Company is once again caught up in its Monsanto past. The "WirtschaftsWoche" reported that two law firms, Hausfeld and Tilp, have filed a lawsuit on behalf of various investors before the Regional Court of Cologne against the Bayer Group. According to the two plaintiffs, Bayer should have recognised the risk of legal action during the multi-billion-dollar takeover of glyphosate developer Monsanto and informed its shareholders accordingly.
In a statement, Bayer AG said it was convinced that it had acted at all times in line with its obligations and in accordance with applicable laws. Bayer's share price has recovered strongly to EUR 55 from a low of below EUR 0.40 at the end of October. After Friday's announcement, the stock corrected to EUR 52.30. It is now essential to hold the significant EUR 50 mark.