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March 2nd, 2022 | 11:35 CET

Defense Metals Shell Lukoil - Commodity investments without contact debt

  • RareEarths
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Until now, China seemed to be a top dog among rare earths. But its position in the Russia-Ukraine conflict is unclear. Therefore, it seems all the more valuable to discover countries that also produce rare earths, such as Canada. These days, people are looking very closely at who is on which side. This week, for example, Shell cut ties with Gazprom. But at the Russian energy giant Lukoil, one of them does not want to leave his post - and thus immediately endangers his entire country...

time to read: 5 minutes | Author: Juliane Zielonka
ISIN: Shell PLC | GB00BP6MXD84 , LUKOIL SP.ADR RL-_025 | US69343P1057 , DEFENSE METALS CORP. | CA2446331035

Table of contents:

    Defense Metals - Rare earths without war alliances

    The war in Europe is back, and with it, the challenges as far as energy supply is concerned. Germany has abandoned nuclear power after Fukushima, and the Nord Stream 2 project is finally on hold due to the tense situation between Russia and Ukraine. Which energy sources will determine our everyday lives in the future depends largely on the so-called rare earths. The name is misleading because rare earths are actually rare metals that occur in the earth. They are extracted from ores and processed into rare earth metals or rare earth oxides. They are used to power notebooks, electric motors, smartphones and even wind turbine generators. Rare earths include a total of seventeen metals. Other uses for these metals include power generation, medicine, agriculture, data processing, the environment, aerospace and defense.

    The Canadian Defense Metals Corporation is a company focused on acquiring mineral deposits containing metals and elements. Accordingly, the Company manages ground resources where rare earth elements can be found. These resources at Defense Metals currently amount to 4,890,000 tons with an average of 3.02% LREO (Light Rare Earth Oxide). In British Columbia, the Company holds an option to acquire 100% of the 1,708 hectare 'Wicheeda' rare earth element property near the city of Prince George, with a population of approximately 724,000.

    Especially given the geopolitical situation, it makes sense to invest in rare earth deposits, particularly outside China and Russia, in order to position one's portfolio in a crisis-proof manner. China has dominated the rare earth sector for a long time. Now, more and more factors are coming together to shake the country's leadership in the sector. President Dr. Luisa Moreno of Defense Metals explains, "China is still the largest producer of rare earths over the last decade, with a 60% share. But there are increasingly other players, such as the US, Canada and other locations around the world." It is time to increase investments in the country under the flag of the maple.

    Shell - Saying goodbye quietly - Paka!

    As Putin doggedly sticks to his war of aggression in Ukraine, other companies are disengaging from Russian business ties. Пока!", meaning paka, is also what Shell is saying. That is Russian for "bye." Shell is an international energy company specializing in the exploration, production, refining and marketing of oil and natural gas and the production and marketing of chemicals. Shell's board of directors announced on February 28 that it would withdraw from its joint ventures with Gazprom and related companies. These include the 27.5% stake in the Sakhalin II liquefied natural gas plant, the 50% stake in Salym Petroleum Development, and the Gydan Energy Venture. Shell also plans to exit its stake in the Nord Stream 2 pipeline project.

    "Our decision to exit is made out of conviction," CEO Ben van Beurden says of this decision. "We cannot and will not stand idly by. Our immediate focus is on the safety of our employees in Ukraine and supporting our employees in Russia. In discussions with governments around the world, we will also work through the detailed business implications, including the importance of energy security for Europe and other markets, while complying with relevant sanctions."

    Shell is not abandoning its shareholders. Shell's corporate growth strategy and financial framework remain unchanged. The Company plans to distribute 20-30% to shareholders in the form of dividends and share buybacks while targeting a strong balance sheet with long-term AA rating scores. Announcing its USD 8.5 billion share buyback program for the first half of 2022, Shell has increased its stake and expects to increase its dividend per share by 4% in Q1 2022.

    Lukoil - Austria puts on the pressure

    And then there is Lukoil. A Russian multinational energy company headquartered in Moscow, specializing in the extraction, production, transportation and sale of crude oil, natural gas and petroleum products. And once again, the ex-Chancellor is in the thick of things in Russian supervisory board positions. Former Chancellor Gerhard Schröder is still keeping a low profile about his relations with Putin. And now he has no more employees. After all, they all resigned of their own accord because Schröder was not clear enough about his position toward the Russian president. "No," they said, "we won't go along with that!" And so his entire staff left.

    The neighboring country of Austria is causing a similar stir. It seems to be popular among ex-statesmen to get a high position in a Russian company and keep counting the incoming rubles that end up in their own account. Such is the case with former chancellor Schüssel, the Austrian counterpart to Schröder. He holds a position on the supervisory board of the Russian Company Lukoil.

    At a press conference this week, Christian Deutsch, the leader of the SPÖ (Social Democratic Party of Austria), called on the current chancellor, Nehammer, to speak plainly with Schüssel in order to convince him to give up his position on the supervisory board. Austria's reputation would be at stake if Schüssel did not resign, the statesman urged the incumbent chancellor. Ex-chancellor Schüssel receives EUR 100,000 a year for his supervisory board role. "That Schüssel continues to work for Lukoil founder Alekperov while pocketing EUR 100,000 for his work there is irresponsible, cynical and shameful." The arguments in favor of the post are very thin: it is a company listed on the London stock exchange and not a Russian state-owned company, Schüssel says. That is about as sovereign as having a mailbox as a business address in the Dutch Antilles in order to wash one's hands of the matter and thus not jeopardize the purpose of the Supervisory Board post.

    However, the piquant thing is that founder Vagit Alekperov is not only Lukoil's largest shareholder but is also considered Putin's closest confidant. Therefore, in these war-torn times, one should think carefully about who one does business with, how, and what contact debt can also arise from investments.

    Rare earths are essential energy suppliers for existing and future technologies, including medicine, defense and GreenTech. The war of aggression in Ukraine shows how valuable sources of raw materials without connections to Russia are. Therefore, investments in Canadian companies, such as Defense Metals Corp., lend themselves as an alternative to the rare earths top dog, China. Shell is breaking away from Russia's Gazprom and promises its shareholders a stable dividend. Lukoil emerges as a company close to Putin with its founder. Ex-Chancellor Schüssel is endangering his country's reputation, Austria, by holding on to his position on the supervisory board there. Every investor should consider on which side he stands with his money.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Juliane Zielonka

    Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.

    About the author

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