25. June 2021 | 10:58 CET
Carnavale Resources, Rio Tinto, TotalEnergies - Commodities still in hype
Commodities are in demand, as seen from the Bloomberg Commodity Index, which reached a multi-year high on June 11. Among other things, this is due to China's enormous hunger for raw materials and the infrastructure program of the USA. Inflation fears also drive more investors to commodities, as there is no end in sight to the loose monetary policy. In addition, there is a rethinking of climate protection, giving rise to hypes such as hydrogen or e-mobility. These new technologies require raw materials such as copper or nickel, and so commodity prices are picking up significantly in almost all sectors. That's why we are taking a look at three exciting commodity companies today.
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ISIN: CARNAVALE RESOURCES LTD | AU000000CAV5 , RIO TINTO LTD | AU000000RIO1 , TOTALENERGIES SE | FR0000120271
"[...] 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
Carnavale Resources - Owns 4 diversified projects at once
The Australian junior explorer Carnavale Resources focuses on acquiring and exploring high-quality and advanced projects, trying to find gold, copper, nickel, platinum, palladium and strategic minerals related to e-mobility. Currently, the Company owns 4 projects in Western Australia.
The nickel project is called Grey Dam and was reviewed in 2020 using existing data and shows copper and platinum anomalies indicative of a nickel sulfide deposit. At the Barracuda Project area, platinum, palladium, copper and nickel anomalies have been discovered but not yet explored by the previous owner. A VTEM survey will be conducted there in the second half of the year to identify exploration targets. The Ora Banda South gold project is close to several gold mines and boasts a 4km and 1.2km gold anomaly. An exploration program is planned but not yet scheduled.
The current main project is also focused on gold and is called Kookynie, a historic mining area covering 50km². It is surrounded by gold mines and drilling has been intensive there since November 2020. In the first two phases of drilling, up to 16.25 grams of gold per tonne was found. The third drilling program was completed on May 28 and results are expected by the end of June. The objective of this drilling was to investigate anomalies at known mines further. It is intended to define the gold mineralization prior to RC drilling more accurately.
The diversification of the projects makes the Company quite interesting. The share is currently quoted at AUD 0.007. With around 2.3 billion shares, this results in a market capitalization of AUD 16.6 million. Speculative investors can take a position with the prospect of news coming soon.
Rio Tinto - Broadly based and now sustainable
Rio Tinto is a broad-based commodity company that produces iron ore, aluminum, copper, titanium, borates, salt, but also diamonds, among other things. The Company operates globally and has struggled in recent years with a stagnating commodities market and the emerging sustainability issue. Since the end of October 2020, the share has been running upwards, driven by ever-increasing commodity prices.
Skyrocketing prices, especially for copper and iron ore, have allowed the group to reduce its debt by two-thirds in recent years, despite a high dividend yield for shareholders of over 6%. Electrification will continue to increase the demand for copper while supply decreases, guaranteeing continued high prices in this area in particular. For investors, this is good news.
The Company is constantly investing about USD 250 million to explore new deposits to ensure sufficient reserves. There is also an increasing focus on sustainability, which will become more and more critical in the future, as factors such as the ESG system will become more and more decisive for investment decisions. In the last 5 years, over USD 1 billion has been invested in climate-related projects, 75% of the electricity consumed is produced via renewable energy, and the Company ranked 3rd in the Corporate Human Rights Benchmark in 2020. So you can invest with a clear conscience.
TotalEnergies - Already reinvented itself
Probably everyone has driven past a Total gas station at some point. Anyone who thinks that Total is a pure oil and gas producer is very much mistaken. It is not for nothing that Total has changed its name to TotalEnergies. Because even though the price of oil is currently climbing sharply, the world wants to reduce CO2 emissions. Some countries want to become climate-neutral by 2050, and the ruling against Shell in the Netherlands shows that the oil giants cannot simply carry on as before.
TotalEnergies quickly moved toward e-mobility, acquiring battery producer Saft Groupe for EUR 1.1 billion in 2016. At the moment, the focus is on expanding renewable energy. On June 16, it was announced that the Company is bidding in a consortium to build an offshore wind farm in Scotland. By 2030, the Company wants to build 100 gigawatts of total capacity from renewable energies. In Amsterdam, the Company is building 2,200 charging stations for e-cars.
In Leuna, the Company currently produces 700,00 tons of ethanol based on fossil fuels. That is set to change, thanks to a partnership with Sunfire and Fraunhofer. The goal is to produce the methanol with hydrogen and thus be able to supply green methanol. The pilot project has already started, as announced last Friday. So TotalEnergies is working in a very progressive way, and it is one of the few oil companies that did not have to cut its dividend in 2020. The price-to-book ratio of 1.1 shows that the Company is very favorably valued.