December 5th, 2024 | 08:50 CET
Copper shortage, Crypto, and a hunger for energy! What is in store for Super Micro Computer, MicroStrategy, SAP and XXIX Metal Corp. in 2025?
Sharp increases in energy commodities are hindering electrification projects. Copper is indispensable for these initiatives and will become one of the key resources driving innovation in the coming years. Without the red metal, electric motors cannot be built and huge amounts of electricity cannot be transported over land. Copper is also a critical component in designing a completely new energy infrastructure. Trends such as Web 3.0, high-performance computing, cloud computing, and artificial intelligence are further exacerbating the energy shortage. Significant demand increases are expected in China and India, whose resource hunger impacts the entire planet. The race against time is already in its third round; new copper deposits must be developed urgently! Which stocks are at the forefront?
time to read: 5 minutes
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Author:
André Will-Laudien
ISIN:
SUPER MICRO COMPUT.DL-_01 | US86800U1043 , MICROSTRATEG.A NEW DL-001 | US5949724083 , SAP SE O.N. | DE0007164600 , QC COPPER AND GOLD INC | CA74738B1094
Table of contents:
"[...] 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
Author
André Will-Laudien
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
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Web 3.0 and Crypto – The copper deficit could widen dramatically
Copper demand will increase significantly by 2030 due to the boom in Web 3.0, crypto mining, and energy-intensive applications with artificial intelligence (AI). According to forecasts, the AI industry alone could increase demand by up to an additional 1 million tons annually. This increase results from the massive use of copper in high-performance data centers, which are crucial for the functionality of AI applications. Copper is mainly used for electrical components such as cables, power distribution and cooling systems. A single megawatt of data center capacity requires 20 to 40 tons of copper. In addition, there are further advances in the field of e-mobility and the expansion of alternative energies. Conclusively, research institutes expect a general supply deficit of 4 to 5 million tons by 2030, likely exacerbating the price and availability situation further. According to Wood Mackenzie, annual primary copper demand will increase by as much as 30% by 2030. A large number of new projects are needed now to successfully manage the energy transition.**
XXIX Metal Corp. – Vast properties in Quebec and Ontario
The market is turning its attention to interesting properties that could go into production in the next few years. Copper has been mined on a large scale in the Canadian government districts of Quebec and Ontario for a long time. In the middle of Vale and Glencore's operating mines is the "Opemiska" copper mining complex, a former high-grade copper producer in Quebec with a land package of over 13,000 hectares. The most recent resource estimate showed a substantial 2.1 billion pounds of copper equivalent in measured and indicated resources. The property is owned by QC Copper & Gold.
Stephen Stewart relishes his role within the highly successful ORE Group and as CEO of QC Copper & Gold. The ORE Group has in-house technical and financial expertise, focusing on world-class jurisdictions and metal deposits with strong long-term fundamentals. In addition to his Opemiska property in the Chibougamau district of Quebec, CEO Stewart has his sights set on another copper project called "Thierry" in Ontario. Thierry is currently the largest copper property in Ontario and has recently been the subject of further exploration. The focus was on the K1 property (open pit) near the K2, G Zone and J Zone in northwestern Ontario. The Thierry Project includes two past-producing open-pit mines that transitioned to underground mining and produced 5.8 million tons grading 1.13% Cu and 0.14% Ni between 1976 and 1982 under UMEX Inc. The Thierry property is accessible by all-season road, an airport within 5 km, a provincial power grid 8 km away, and a nearby railway connection. Additionally, it has extensive infrastructure in place.
At yesterday's International Investment Forum (IIF), CEO Stewart presented his proposal to combine the two projects into a new company, creating the largest combined copper junior company in Eastern Canada overnight. With the approval of the subsequent Annual General Meeting, a new company called XXIX Metal Corp. was formed yesterday from these two copper projects through the complete takeover of Cuprum Corp. The new company is expected to cause a stir in the coming months. The official closing of the transaction is scheduled for today, December 5. The new company has estimated reserves of 4.8 billion pounds of the red metal.
XXIX Metal Corp. will soon trade under the ticker "XXIX" in Canada and is set to be listed in Germany soon. Until yesterday, the predecessor company had been trading at CAD 0.12 with 174.4 million shares. The transaction fits perfectly into the current commodities environment of scarce strategic metals. The next copper rally should give the XXIX price a significant boost. (Note: The ticker XXIX represents the Roman numeral 29, which is the ordinal number of copper in the periodic table).
Super Micro Computer, MicroStrategy and SAP – The high-tech speculation continues
Investors are currently invested in high-tech stocks at around 68%, according to the weighting of global ETFs. This is evident from the extreme increases in market capitalization over the last two years. For the second year in a row, the S&P 500 index has risen by more than 30%. Such an extreme appreciation has not been seen since the 1980s. In the last few days, Super Micro Computer (SMCI), MicroStrategy, and the German SAP have been particularly in the spotlight. SMCI saw a quick 100% rally after the previous sell-off. The reason is that the Company was able to hire a new auditor, and internal investigations did not reveal any accounting violations. Short sellers likely had to close their open positions.
Michael Saylor, the visionary CEO of MicroStrategy, has earned a legendary reputation in the crypto community for his bold Bitcoin investments during the Corona Crash. His strategic approach with convertible bond capital not only led to a huge increase in the value of his company's portfolio but also inspired other major market players, such as Microsoft, to consider their own Bitcoin reserves. MicroStrategy currently holds 386,700 BTC worth over USD 37 billion. In the last week of November alone, the Company generated a return of 12.3%, resulting in a daily profit of around USD 544 million. No wonder the stock became one of the most heavily traded stocks on the NASDAQ.
Germany's SAP is also sprinting from one peak to the next. Yesterday, a new all-time high of EUR 242 was reached. The weighting in the DAX 40 index is now 16%. Even analysts can no longer keep pace. On the Refinitiv Eikon platform, 24 of 34 experts recommend SAP shares as a "Buy". However, the 12-month average target price of EUR 238 was already exceeded yesterday. It will be interesting to see how many rating adjustments are forthcoming.
The scarcity of raw materials could become a significant burden in the future. If limited availability translates into sharply rising prices, it will ultimately impact consumer costs. This will not pose a problem for high-tech companies because they have a high degree of pricing power. Adding a junior resource company like XXIX Metal Corp. to the portfolio could prove to be a real winner in the current environment.
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