19. February 2021 | 10:25 CET
Defense Metals, BYD, NEL, Plug Power - Rare earths, who is the fastest?
Scarcity is the issue in 2021! Western governments have completely miscalculated regarding technological progress. They are now being driven by the industry; decisions that should have been made 5 years ago are now being followed abruptly. Since Battery Day in mid-September 2020, it has been clear that a technology giant like Tesla, led by Elon Musk, will enter large-scale battery mass production. What is missing is the complete closing of ranks between battery and car manufacturers so that the produced and expensively developed high-performance batteries are also installed in e-cars through corresponding demand. In coordination rounds between the automotive industry and the EU, the decision has probably already been made: E-mobility will come, and it will come in the big version...!
time to read: 4 minutes by 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.
Defense Metals - A consistent approach
Today, industrial nations are incredibly dependent on a secure supply of raw materials. Procurement and securing these raw materials are among the top priorities in politics and subject to many contract negotiations. In addition to the already prevailing copper shortage, rare earths represent a decisive bottleneck factor for all possible high-tech applications. With the pandemic's side effects, a shortage problem is already emerging again, and the situation is considered serious.
Proof of this was the worldwide nervous reaction to an announcement by China that it would no longer be able to satisfy the demand for the scarce metals indium and germanium in the future. It remains hopeful that the few rare earth projects will be developed consistently because the leading supplier, China, could quite simply turn off the tap - in which case the high-tech assembly lines in the USA and Europe would reach a standstill.
The recent announcement by Defense Metals Corp. of British Columbia is now all the more important to us. The Company has conducted additional hydrometallurgical test work at the Wicheeda pilot project using a high-grade rare earth element (REE) mineral concentrate produced at Defense Metals' own 26-tonne flotation pilot plant. The results delivered a mineral concentrate averaging 7.4% NdPr oxide (neodymium-praseodymium). The Wicheeda REE permit area, accessible by road, is located near Prince George, an excellently connected location. It hosts Indicated Mineral Resources of 4,890,000 tons averaging 3.02% light rare earth elements ("LREE") and Inferred Mineral Resources of 12,100,000 tons averaging 2.90% LREE. These are very encouraging values.
In the process control shown now, the risk of the planned hydrometallurgical pilot plant is significantly reduced, leading to greater flexibility in the project's future design. The investment will be quickly commercialized. Defense stock has already responded, rising more than 80% in February alone. Any weakness here should be used to enter; the story continues!
BYD - The analysts remain bullish
The Chinese technology Company "Build Your Dreams" (BYD) managed to convince the US authorities. Yesterday, there was a framework agreement for the purchase of electric buses by the US state of New Mexico, and the nationwide contract is still on the agenda. The content includes the purchase permit for local transport companies to buy BYD coaches and city buses from American production. BYD operates its plant in Lancaster, California, for this purpose. The vehicles and electric buses produced must meet the strict "Buy America" standards for a foreign manufacturer to participate in the bidding process. For the Chinese manufacturer, this commitment is essential for its nationwide market entry.
Goldman Sachs analyst Fei Fang is very optimistic about the registration figures for electric cars in China. In his latest study, Fang assumes that around 4.6 million e-cars will be sold in the world's most significant car market in 2025, and sales are even expected to rise to 8.5 million units in 2030. The BYD share is currently in a consolidation. The high was at EUR 28.5 - now the chart is crumbling a bit...! After a correction, BYD is interesting again.
NEL - Strong growth announced, share slumps
Norway's hydrogen specialist Nel ASA plans to continue investing heavily in 2021. The primary goal is to radically reduce the production costs for green hydrogen to USD 1.50 per kilo. To meet the high demand for its products and new developments, the Company plans to hire more than 100 new employees this year. More than 25% of the capital raised in 2020 for plant, equipment and technology projects will be used to build additional capacity depending on market needs.
Revenue in the fourth quarter of 2020 was NOK 229.1 million, a modest NOK 53.2 million more than in the same period last year. Thanks to the investment in Everfuel, the Company's overall result increased from a loss of NOK 93 million in the fourth quarter of 2019 to a pre-tax profit of NOK 1.3 billion. The order book grew to a respectable NOK 980 million, and the Company has ample liquidity of NOK 2.3 billion. So far, so good!
Unfortunately, the market had expected much better figures; consequently, the share corrected yesterday to a low of EUR 2.60 - the high was reached 3 weeks ago at around EUR 3.40. In our opinion, there is still a lot of room to move downwards, but positions should be built up again between EUR 2.00-2.25.
Plug Power - The chart does not look good
The figures from NEL naturally also make Plug Power fans think twice. Plug Power has landed a big coup on Tuesday, but it has not helped the price so far. In collaboration with Acciona's Infrastructure Group, the Company plans to build a hydrogen production and distribution platform in Portugal and Spain. The news about the joint venture with a European market leader is hugely positive and would explain the losses at competitors like Nel, Ballard Power or FuelCell Energy.
However, the Plug share has been stuck for 2 weeks now. After a high of just under EUR 62.00, the share price fell a further 8% yesterday, after the share price was already clearly under fire in New York the previous day. We had warned about overvaluation here several times; the share nevertheless continued to rise steadily. This Friday is also option expiration for February 2021. Remain on guard - because the share has increased by over 1,000% and has not yet made any significant correction.