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Lewis Black
CEO | Almonty Industries
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27. October 2021 | 11:43 CET

Defense Metals, Nordex, Xiaomi - Battle for raw materials intensifies

  • RareEarths
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China is scaling back its magnesium production due to electricity problems. The Chinese government is aiming to reduce energy consumption and thus emissions. It will inevitably lead to supply bottlenecks worldwide, and in Germany, it will initially affect the metal industry. However, since China produces 90% of the world's magnesium, there are, in fact, no alternatives. Similar problems exist with tungsten and rare earths, needed for almost all new technologies, from renewable energies to consumer electronics and e-cars. If you want to reduce this dependence, you have to look for alternatives.

time to read: 4 minutes by Armin Schulz
ISIN: DEFENSE METALS CORP. | CA2446331035 , NORDEX SE O.N. | DE000A0D6554 , XIAOMI CORP. CL.B | KYG9830T1067



Armin Schulz

Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

About the author

Defense Metals - Exploration going well

One of these alternatives is the Canadian explorer Defense Metals. The Company has its 1,708-hectare Wicheeda Rare Earth project in British Columbia, where a drilling program has been underway since September 8, with 32 drill holes planned for a total length of up to 5,000m. Some 4.9 million tonnes averaging 3.02% LREO (light rare earth oxide) have been detected on the site to date. From this, 12.1 million tonnes of mineral resources averaging 2.9% LREE (light rare earth oxide) have been inferred.

Two updates have already been issued since the start of the drilling program. On October 4, 8 drill holes with a total length of 1,500m had already been completed, and the first results from these holes show a higher grade of mineral occurrences than the last results. A second diamond drill rig has even been brought into service to drill several infill holes in the central area of the deposit to accelerate the completion of exploration in 2021. Experts from SRK will visit the sites as part of the economic analysis being conducted by SRK Consulting.

On October 25, Dr. Luisa Moreno became a new member of the board of directors. She has the ability to analyze specialty metal deposits and is very well connected in the capital market. In addition to the main project, the Geiger North and Klaproth projects, which the Company has owned since 2018, could become interesting. There is uranium mineralization there that will be re-evaluated in the current uranium hype, the Company announced on September 23. The stock is currently stuck in a sideways phase between CAD 0.21 and 0.30 and presently trading at CAD 0.265. The upcoming results could bring momentum to the share.

Nordex - Sales up substantially in the 3rd quarter

In the wind power industry, neodymium and dysprosium are the main rare earths required, as they can be used to produce the strongest magnets. These magnets are used in generator construction. But not all wind turbines contain rare earths. Other applications for rare earths include battery storage. Nordex specializes in the construction of wind turbines and offers its customers an all-round package. It not only maintains the wind turbines it builds but also continuously monitors them using sensors.

The Company is benefiting from the German parliamentary elections on the one hand, as the Greens are very likely to be part of the government. Furthermore, the previously announced figures for the third quarter are convincing. Incoming orders increased significantly. While 271 wind turbines were sold in 2020 in the third quarter, the figure for this year is 389. That is an increase of a whopping 40%. Also, in October, 4 orders from Ireland, Poland and Ukraine were reported.

On October 21, it was announced that Blackrock now holds more than 5% of the shares in Nordex. The share price has risen sharply since marking its low for the year of EUR 12.64 on October 6, which was undoubtedly due to the unexpected capital increase, among other things. The downward trend was broken, and the 50-day moving average was also broken from the bottom up. Interested investors should currently wait for a consolidation and keep November 15 in mind, as the third-quarter figures will be published then.

Xiaomi - Investor day organized

Xiaomi is currently the second-largest cell phone manufacturer when it comes to sales. As mentioned initially, the production of smartphones and other high-tech devices would not be possible without rare earths. Unlike many other companies that manufacture outside of China, Xiaomi sits at the source. 90% of all rare earths consumed worldwide come from China. Thus, production should not be at risk.

On October 19, the Company held an investor day to share its ambitious goals for the coming years. Two points stood out. The first is to become the market leader in the smartphone sector by 2024, and the second is to produce the first electric vehicles in the same year. Especially abroad, the market shares in the smartphone sector are growing significantly due to the premium smartphone strategy. Within China, the Company was overtaken by Honor, a former Huawei subsidiary. Whether Xiaomi will secure market shares in the e-mobility sector is currently still written in the stars.

The Company participated in a USD 563 million funding round at DreamMe, which also saw investment from Alibaba founder Jack Ma. Xiaomi is also looking to gain more market share in the vacuum cleaner sector. The stock, like almost all China stocks, has been able to gain ground in recent days. To finally break the downward trend of the share, a closing price above EUR 2.60 is necessary.

Inflation, broken supply chains, an energy crisis in China and absolute dependence on the Middle Kingdom will continue to cause conflicts in the near future. Defense Metals wants to produce rare earths, but the road to becoming a producer will take some time. Nordex has full order books, now only margins need to improve, and things will pick up. Xiaomi should not have any supply problems with raw materials. The question here is instead whether the production of e-vehicles is not too ambitious.


Armin Schulz

Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

About the author

Conflict of interest & risk note

In accordance with §34b WpHG we would like to point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH may hold long or short positions in the aforementioned companies and that there may therefore be a conflict of interest. Apaton Finance GmbH may have a paid contractual relationship with the company, which is reported on in the context of the Apaton Finance GmbH Internet offer as well as in the social media, on partner sites or in e-mail messages. Further details can be found in our Conflict of Interest & Risk Disclosure.

Related comments:

26. November 2021 | 13:09 CET | by Stefan Feulner

Steinhoff, Defense Metals, Deutsche Bank - Good news

  • RareEarths

So now it has been presented, the new coalition agreement of the traffic light coalition, consisting of the SPD, FDP and the Greens. Besides the connoisseurs of cannabis, which is to be legalized in Germany, the banking and insurance industry should also be satisfied with the drafting. In addition, one focus of the alliance is on transformation in terms of the energy transition. The plan sounds optimistic, but implementation will be all the more difficult.


16. November 2021 | 12:56 CET | by Fabian Lorenz

Climate conference ends: Nel, Plug Power and Defense Metals continue with momentum

  • RareEarths

After two weeks, the climate conference in Glasgow has come to an end. The results are manageable. Although coal and other fossil fuels were declared to be phased out for the first time, the wording was watered down several times. For example, it was only possible to agree on a call that the use of coal-fired power plants without CO2 capture should be "gradually reduced". But even without concrete resolutions, one thing is sure: the energy turnaround is in full swing, and investor darlings Nel and Plug Power are again stepping on the gas. Defense Metals could be due for a reassessment after the completion of drilling.


11. November 2021 | 11:36 CET | by Nico Popp

Nordex, Defense Metals, American Lithium: USA pushes lithium market - will rare earths follow?

  • RareEarths

The run on lithium has caused a furor on the stock market in recent weeks. Almost all companies with "lithium" in their names have made significant gains. The background to this is the governments' e-car offensive and a lot of government funding and subsidies for battery technology. The lithium required is held mainly in the ground by smaller companies. Investors who missed out on this wave may be wondering where the music will play next. To find out, one only has to spin the e-car story further: As Tesla, BYD or even VW's green runabouts are preferred to be charged with green electricity, rare earths could soon experience a similar hype. We present shares around the hype topics of e-mobility and the energy transition.