15. July 2021 | 13:25 CET
Defense Metals, Varta, Nordex - Scarce metals are the new gold!
Whether gallium, chromium or rare earths - many metals are indispensable for modern technology. Where supply bottlenecks or shortages threaten, researchers have now determined the criticality of 62 elements in the most comprehensive analysis to date. As it shows, the supply risk is particularly high for the metals needed for the highly specialized tasks in high-tech devices. Iron, copper, nickel and tin, and almost all other metals of the periodic table, make our modern civilization possible. Most technical applications would not exist without them - from cars and computers to televisions and cell phones. How do companies deal with fragile supply chains and shortages?
time to read:
ISIN: DEFENSE METALS CORP. | CA2446331035 , VARTA AG O.N. | DE000A0TGJ55 , NORDEX SE O.N. | DE000A0D6554
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 - The next producer is in Canada
The dependence on particular raw materials in China leaves a dull feeling in the stomach because there are only about 20% free resources worldwide. Rare earths with names like neodymium, praseodymium and dysprosium are critical to producing magnets used in future industries for wind turbines and electric cars. In addition, these metals are found in consumer products such as smartphones, computer monitors and telescopic lenses.
With the green wave benefiting our climate, electromobility and renewable energy generation will play a crucial role as modern civilization requires more and more energy. To meet current Kima Protocol targets, we will need at least four times the amount of rare earth metals in 2040 for renewable energy sources alone. The US Senate recently passed legislation to improve American competitiveness to avert the resource problem, specifically including provisions to strengthen supply chains for critical minerals.
One of the few prospective projects outside China is maintained by Defense Metals. The Canadian exploration Company is focused on advancing the Wicheeda Rare Earth Project, which covers approximately 1,708 hectares in the state of British Columbia. Highly successful testing of the Company's 26-tonne flotation pilot plant, conducted at SGS Lakefield's metallurgical test facility, has already yielded 1,200 kilograms of high-grade REE mineral concentrate. The goal is to produce a saleable NdPr oxide product - Defense Metals could begin in 2022.
Looking at the scarce supply of resources in the western industrialized countries, the Defense share is more than interesting at the current level of around CAD 0.24. With around 80 million shares, the market capitalization is just CAD 20 million. One should definitely take hold here.
Varta - The next battery generation is in the run-up
Like other technology manufacturers, Varta relies on the availability of critical metals. In recent years, they have benefited from the boom in wireless headphones. Tech giants like Apple and Samsung power these devices with Varta's small lithium-ion button cells. The question remains whether the battery maker can sustain its high margins in this business or whether Asian competitors can increase their pressure and gain market share. The figures for the first quarter showed an upward trend, but they are still a tad below the high expectations of analysts. The half-year report will now follow on August 13.
A possible blockbuster in the next few years could be the business with the larger cell formats. According to Varta, the lithium cells (V4Drive) newly developed in recent years have an energy density that has been improved by around 30%. The successful expansion of activities in this area and the first well-known partners from the automotive industry, such as Porsche, are creating a lot of fantasy in the medium term. Varta has just opened the new plant in Ellwangen, but a significant volume is not expected to come off the production line before 2024.
From a chart perspective, the Varta share is now in interesting terrain, as the recent consolidation stopped at the support at EUR 130. For new heights, the resistance at EUR 145 now needs to be tackled. We are excited!
Nordex - New money and orders from Italy
Wind turbines score points for their fast energy return times - that is now a recognized fact. After all, energy is only used once for their construction, and, in contrast to fossil power plants, they do not require any additional fuels during operation. Overall, the metal content of 28.5% in wind energy is higher than in other power plants, making producers much more dependent on the scarcity situation on the world markets.
Last week, Nordex caused a sensation with a massive capital increase. A total of almost 42.7 million new shares were issued for EUR 13.70 each. Placement is currently still ongoing, but complete acceptance is considered certain. As a result, the wind turbine manufacturer has sufficient liquidity for growth despite the repayment of shareholder loans.
This week, Nordex can announce further major projects: The orders comprise two wind turbines of the Delta4000 series and come from Italy. Nordex is not disclosing the customer's name, but in total, Nordex will be supplying wind turbines with a capacity of 54.9 MW to Italy under the two orders. Since the beginning of 2021, the Nordex Group has received orders for 143 MW from Italy. The construction of the projects is scheduled for 2022.
It sounds good - and the Nordex share price can at least hold its ground on the stock market. At present, the market is probably still digesting the announced pieces from the capital increase because those who know their supply from the placement can still sell old stocks at higher prices. The EUR 15 mark is essential for the weal and woe of the share. Wait and see for the time being.
All of the companies shown above depend on scarce raw materials, especially critical metals. While Varta and Nordex hope for availability, Defense Metals can benefit from direct delivery once production has started.