December 27th, 2021 | 09:56 CET
Daimler, Noram Lithium, Nikola - This is the breakthrough
Table of contents:
"[...] In 2020, the die is finally cast in the automotive industry towards electromobility. [...]" Dirk Harbecke, Executive Chairman, Rock Tech Lithium Inc.
The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
He is passionate about analyzing a wide variety of business models and investigating new trends.
The automotive sector is going electric
Whether VW, Daimler or BMW, the German automotive industry is increasingly focusing on electromobility and restructuring its production. The Volkswagen Group, for example, wants to have converted half of its entire model range to battery-powered cars by 2030. At the Daimler Group, 50% of the units sold are to be electric cars by 2025. The Stuttgart-based company plans to invest over EUR 40 billion in electromobility between 2022 and 2030.
Daimler is reducing its share in the Denza joint venture, founded as a 50/50 joint venture with the Chinese automotive Company BYD in March 2012, to 10%. BYD Auto Industry will hold the remaining 90% in the future. However, the long-term partnership is to be maintained.
Strong demand for raw materials
The acceleration of the energy transition and the strong growth in demand from the electromobility sector are making the raw materials required more expensive. In contrast, supply is mostly in short supply. Alongside cobalt and manganese, lithium is one of the fuels of the mobility revolution. The light metal is needed for the production of rechargeable batteries with high energy density, such as those used in e-cars. Around 80% of global lithium production comes from Chile, Argentina and Australia. The sharp rise in prices makes projects that appeared uneconomical in the past attractive at present and increases the expected project returns enormously.
In the USA, on the other hand, one searches almost in vain for first-class lithium projects. One of the few can be found between Las Vegas and Reno. Equipped with first-class infrastructure and the Gigafactory of Tesla located in the neighborhood, Noram Lithium manages a wholly owned 11.33 sq km large property. Ensuring that the Zeus project could be a success is that just 2km away are Albemarle's lithium brine production operations with the Silver Peak Mine, which has been producing lithium for decades.
Noram Lithium's long-term strategy is to become a leader in the development of lithium deposits and establish itself as a low-cost producer and supplier specializing in the sale of lithium to the European, North American and Asian markets.
Recently, the Company announced an economic analysis of the potential profitability of the mineral resources. The calculated value of the Zeus project is USD 1.299 billion after-tax assuming an 8% discount factor. The after-tax project return is around 31%. The assumed price is only USD 9,500 per ton of LCE. With an average price per ton of LCE of USD 14,500, the NPV increases to USD 2.665 billion. The study assumed an annual production of 31,900 tons of LCE and a mine life of 40 years.
The analysts of the Canadian research house Fundamental Research increased their price target from CAD 1.27 to CAD 1.76 in their last study in September. Currently, the share price of Noram Lithium is CAD 0.88. Thus, based on the analysts' estimate, there is a potential of around 100%.
It is accomplished
Following all the turbulence of the past few months, it was not necessarily to be expected, but Nikola's operations are still moving forward after the management change. The successors of the founder and ex-CEO are even sticking to the schedule. It was promised the first Nikola Tre BREV e-truck would be delivered this year.
Now it has happened. The first two units have been delivered to Total Transportation Services Inc., one of the leading port trucking companies in Southern California, to advance zero-emission transportation solutions at the ports of Los Angeles and Long Beach. In a tweet, Nikola publicized the joyous and historic event. A letter of intent was signed with Total Transportation Services Inc. for 100 trucks.
This announcement builds confidence. Investors acknowledged the news with a share price fireworks of more than 11%. If the development continues to be positive, the "new" Nikola can be expected to do a lot more.
The energy turnaround continues to drive vehicle producers; the transformation from fossil to alternative energy sources is accelerating significantly. As a result, the demand for lithium is increasing enormously. Noram Lithium operates one of the most promising projects in the USA, the Zeuss project. Nikola could have achieved the breakthrough with this historic announcement.
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