August 11th, 2021 | 12:20 CEST
Coinbase, Almonty, Infineon - Deals for the Future
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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
Almonty defies China
The decarbonization of the economy is in full swing, and the prices for the required raw materials are already rising due to increased demand and a supply shortage. Lithium, which like nickel and cobalt is increasingly needed for transport electrification, is more than three-quarters produced in China. In addition to the ever-worsening trade war with the USA, there is also increasing domestic demand, accelerating the shortage of the respective materials.
In the case of the strategic metal tungsten, there is also the problem of limited supply and a quasi-monopoly from China, which dominates around 85% of global production. For three years, the price of tungsten APT (Ammonium Para Tungstate) has exceeded USD 300 per metric ton unit (MTU) for the first time. Thanks to its unique properties, tungsten can be used in a variety of applications. The metal's enormous heat resistance brought a breakthrough in the development of artificial light sources. Increasing demand is currently being enjoyed by tungsten from classic sectors such as oil and gas, mining and chemicals, and new applications such as charging stations for e-cars, 5G networks, and semiconductors.
All criteria met
With the construction of the world's largest tungsten mine, Almonty Industries has made a significant move for the future. The Sangdong mine in South Korea is expected to supply tungsten concentrates from the end of 2022 and achieve a market share of 7 to 10% of the global tungsten market. After the groundbreaking ceremony took place weeks ago, the last condition precedent has now been met with a capital increase in the order of AUD 15.25 million, which corresponds to around EUR 9.4 million, to be able to call up a loan from KfW-IPEX Bank in Frankfurt for USD 75.1 million.
In addition, a buyer for the next 15 years with a guaranteed price floor has already been found in the Austrian Plansee Group. Plansee is one of the Company's major shareholders, along with Deutsche Rohstoff AG, which holds 12.2% of Almonty Industries. The purchase agreement secures the Canadians revenues of around EUR 500 million over the term of the contract.
In addition to the capital increase, the Company secured an additional listing on the Australian stock exchange ASX to open itself to an investor audience with an affinity for raw materials. As a result, increasing interest is expected in the Asia-Pacific region, which should lead to a significant increase in liquidity in the share. After an interim high of EUR 0.90 at the beginning of June, the share is consolidating at a more favorable level of EUR 0.65. The analysis house sees a clear buy in the title and confirmed the price target of EUR 1.05.
After the diving of cryptocurrencies in recent weeks, the correction in Bitcoin & Co seems to be over for the time being. A sufferer of the sell-off was the crypto exchange Coinbase, which only recently came to the market. After opening at over USD 400, the value initially had to accept a halving. Currently, the price is back at around USD 270.
With Deutsche Telekom, a prestigious customer has now been acquired. The Bonn-based company relies on cooperation with Coinbase for the custody of its Celo tokens. Celo is a so-called native currency for the Celo platform. The platform aims to make financial tools cross-border and user-friendly, requiring only a cell phone to use them.
Infineon's core business is up and running, and just last week, the Munich-based company was able to report successful third-quarter figures. The group increased sales in the current reporting period by 1% compared to the previous quarter to EUR 2.72 billion. Net income amounted to EUR 245 million, compared with EUR 203 million in the previous quarter.
However, the focus is already on the future and new innovations. Infineon is entering the profitable business of augmented reality glasses and head-up displays with a new chipset. At the beginning of the week, the new technology was presented to the public, impressing with low power consumption and low weight.
From a chart perspective, the stock is about to test its all-time high at EUR 37.30. We are betting on the trend.
The shortage of raw materials will become a serious problem in the coming years, especially regarding the energy transition. Almonty Industries is building the world's largest tungsten mine and should benefit from the rising raw material price. Infineon, which is about to break out to a new all-time high, also benefits from the chip shortage.
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