March 29th, 2023 | 08:19 CEST
Defense Metals, Rock Tech Lithium, BYD - Shares for the energy transition
The energy transition is a major challenge for the world, as it requires transitioning from fossil fuels to renewable energy. In order to switch to renewable energies in the long term, large quantities of critical raw materials such as rare earths and lithium are needed. However, these raw materials are important not only for the energy transition but also for numerous other applications in modern industry. Rare earths are particularly important for the production of powerful magnets used in electric motors and generators. Lithium, on the other hand, is an essential component of lithium-ion batteries used in electric vehicles and renewable energy storage. Today, we look at three companies that can help drive the energy transition.
time to read: 4 minutes
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Author:
Armin Schulz
ISIN:
DEFENSE METALS CORP. | CA2446331035 , ROCK TECH LITHIUM | CA77273P2017 , BYD CO. LTD H YC 1 | CNE100000296
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
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.
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Defense Metals - Preparing the Pre-Feasibility Study
Defense Metals has turned its focus to rare earths and is working on getting into production. Last year, a preliminary economic assessment (PEA) was released for the Wicheeda rare earth project in British Columbia. According to the PEA, the project has an after-tax net present value of CAD 517 million and should pay for itself 5 years after the start of production. Production potential is 25,423 tonnes of REO per year, and revenues from the sale of rare earth mineral concentrates are expected to average CAD 381 million annually. The updated mineral resource estimate for Wicheeda includes an indicated mineral resource of 5 million tonnes averaging 2.95% TREO and an inferred mineral resource of 29.5 million tonnes averaging 1.83% TREO.
On February 21, the Company announced it had begun construction of a hydrometallurgical pilot plant. The purpose of the plant is to demonstrate the processing of flotation concentrates for the recovery of rare earths on a larger scale using the acid-sintering workflow diagram. The samples produced will be distributed to potential end users. In previous flotation tests on rare earth metal samples, an average recovery rate of 81% was achieved for a concentrate containing 45% rare earth oxide. In addition, there were favorable crushing results for several samples which are being used to advance the design of the crushing and milling plant, which is a component of the preliminary feasibility study (PFS).
On March 6, the Company announced that the 3D geological model of its deposit had been updated using over 10,000 m of new drilling completed after the PEA. This is intended to both adjust the mineral resource estimate accordingly and incorporate more detailed data into the PFS. Kristopher Raffle, Director of Defense Metals, commented, "This drilling returned some of the longest and highest grade drill intercepts encountered to date on the project and resulted in the discovery of a new zone of high-grade mineralization at depth that has the potential to positively impact an updated mineral resource estimate." The stock, which has gained more than 110% at its peak since the beginning of the year, has recently consolidated and is trading at CAD 0.295. Support at CAD 0.26 has been held.
Rock Tech Lithium - Groundbreaking ceremony in Guben, Germany
Rock Tech Lithium is a cleantech company based in Canada and Germany that produces lithium hydroxide for electric car batteries. Its first converter and refinery plant for lithium hydroxide will be built in Guben, Germany. The Company has set strict ESG standards and is developing its processing system to be more efficient and sustainable. Rock Tech plans to source the required feedstock from its Georgia Lake spodumene project in Canada and also intends to process lithium from other responsibly producing mines. In addition, the plant will also source materials from battery recycling to create a circular economy for lithium.
The lithium converter was developed to support the transition to electric mobility and is an essential component for automakers in Germany. The groundbreaking ceremony for the converter took place on Monday, March 27. The facility is the first of its kind in Europe and will be a key player in Mercedes-Benz's lithium supply chain in the future. The construction is also important for the Brandenburg region, as it will cover the entire value chain of e-car batteries. Brandenburg's Minister of Economics, Jörg Steinbach, said, "I hope the project will trigger an envy factor."
An exploration program has been underway at the Georgia Lake project since March 7. The mineral resource is to be increased up to and including 2024. A diamond drill rig is being used to drill a total of 3,500 m of holes in the Main Zone North and McVittie deposits to expand the spodumene mineralization. The stock has successfully defended its support area around CAD 2.42 and is currently trading at CAD 2.62. If management successfully completes the converter's financing, the stock has massive upside potential.
BYD - Market leader relies on Nvidia chips
Electric cars use rare earths in various components such as electric motors, batteries, catalytic converters and magnets. Global demand for key rare earth oxides is estimated to increase from 131,500 tons in 2020 to 188,300 tons in 2030. It is even more evident in lithium, where production was around 82,000 tons in 2020. The German Mineral Resources Agency expects demand to be between 316,000 and 558,800 tons in 2030. China leads the way in the production of the two critical raw materials.
Good for BYD, the Chinese manufacturer of electric vehicles and batteries. The Company took the market lead with 1.87 million deliveries in 2022. By comparison, the previous top dog Tesla brought in only 1.3 million. While most of BYD's car sales have been in China, the Company aims for global expansion. To support those ambitions, BYD plans to build one or two factories in Europe, is in talks to acquire Ford's manufacturing plant in Germany, plans to start production in Thailand by 2024 and plans to build a component factory in Vietnam.
The Company produces its own batteries and microchips. In the future, it plans to install Nvidia DRIVE Orin chips in its intelligent driving systems. It is also investing in lithium companies to prepare for future growth. This has created a competitive advantage that the major automotive companies must first make up for. The share has been under pressure recently because Berkshire Hathaway has repeatedly sold shares. Currently, one share costs EUR 25.10.
The energy transition is a major challenge that requires large quantities of critical raw materials such as rare earths and lithium. Defense Metals has put its focus on rare earths and is working on getting into production. Rock Tech Lithium is a cleantech company that wants to produce lithium hydroxide for electric car batteries. Construction of the converter has begun in Guben, Germany. BYD uses the raw materials in their batteries and electric cars. After being the market leader in China, they now want to expand internationally.
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