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March 11th, 2024 | 06:45 CET

Encavis, Manuka Resources, Rheinmetall - Vanadium: From metal to energy source

  • Mining
  • gold
  • Vanadium
  • armaments
  • renewableenergies
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The energy transition presents us with the challenge of efficiently storing renewable energy. A key raw material in this process is vanadium, which is used in vanadium redox flow batteries (VRFBs) and is mainly known for its role in steel production. These batteries are characterized by their longevity, with up to 20,000 charging cycles without any significant loss of performance, and their safety as they are non-flammable. In addition, their scalability allows them to be used both in large-scale grid storage and in the private sector. By storing electricity from wind and solar power, VRFBs are a critical element in supporting the transition to a more sustainable energy supply and ensuring the availability of steel alloys that can also be used in the defense industry.

time to read: 5 minutes | Author: Armin Schulz
ISIN: ENCAVIS AG INH. O.N. | DE0006095003 , Manuka Resources Limited | AU0000090292 , RHEINMETALL AG | DE0007030009

Table of contents:

    Dennis Karp, Executive Chairman, Manuka Resources Limited
    "[...] We will trigger indirect creation of 1,665 new jobs nationwide, while directly employing 300 staff - 270 operational and 30 administrative. [...]" Dennis Karp, Executive Chairman, Manuka Resources Limited

    Full interview


    Encavis - Takeover talks spark enthusiasm

    Wind and solar plant operator Encavis has also recognized the importance of storing renewable energies. At the end of August last year, the Company expanded its business areas by entering the market for battery parks. The Company secured a project in Hettstedt, Saxony-Anhalt. This marked a significant addition to the previous focus on wind and solar plants, as the newly acquired lithium-ion storage system has a capacity of 12 megawatts (MW) and 24 megawatt hours (MWh) of energy. Commissioning is planned for the first half of this year, enabling Encavis to efficiently store surplus energy from its German installations.

    It is not yet clear whether Encavis will commission the project itself and thus be able to balance out fluctuations in supply and store energy for sale. The wind and solar park operator is in preliminary talks about a potential takeover by the American financial investor KKR, with the Company possibly being valued at over EUR 2 billion, corresponding to just over EUR 13 per share. Experts see the takeover price as too low, as Encavis' share price has suffered in the wake of the sector-wide decline in the renewable energy industry and was still trading at over EUR 23 at the end of August 2022. The management's approval is also likely to be anything but certain, as some of the Company's executive bodies made insider trades last year, in some cases at significantly higher prices.

    Apart from that, operations are going very well, even if this has not yet been reflected in the share price. In 2023, the expansion target for electricity production was significantly exceeded with the purchase of 1 terawatt hour. This year, the Company began constructing the second largest solar park in Germany, "Big, Bigger, Bartow", with a generation capacity of 260 MW over an area of 205 hectares in Bartow. It will be interesting to see how the takeover talks progress, but it should definitely be seen as a positive signal for the green technology sector. The announcement of the talks has already positively affected Encavis' share price, which has risen by more than 30% from its low for the year. On Friday, the share went out of Xetra trading at EUR 14.05.

    Manuka Resources - The tension is rising

    Manuka Resources, a company based in Australia, is becoming increasingly important in the mining industry due to its unique projects in Australia and offshore in New Zealand. With two significant precious metals projects and a ground-breaking vanadium-titanium-magnetite (VTM) project, Manuka is setting new standards in the extraction and utilization of mineral resources. The VTM project, located 22 km off the west coast of New Zealand, stands out for its world-class resources and low carbon emissions. With a JORC resource of over 3.2 billion tons, the project stands out for its environmentally friendly and cost-effective extraction method. The project produces the lowest carbon emissions per tonne compared to other iron ore producers.

    This project could not only revolutionize the mining industry, but also bring significant economic benefits to New Zealand by creating key jobs and generating substantial tax revenues. With the extensive vanadium resources essential for green technologies such as vanadium redox flow batteries, Manuka has positioned itself very well. As the Company prepares to finalize its environmental licenses and move into commercial production, recent developments in New Zealand mark a significant inflection point that has the potential to transform the Company.

    A decision on the VTM project is due to be made in the New Zealand parliament in mid-March. The fact that the new government is serious about the project is also demonstrated by the draft legislation that has been introduced to fast-track approvals for mining projects. If the green light is given for the project with a net asset value of around USD 1.8 billion, the share price will likely be revalued. In addition to the VTM project, Manuka also operates two precious metal projects in New South Wales, including the historic Mt Boppy gold project and a large silver project called Wonawinta, which is potentially one of Australia's largest silver deposits. With the recent rise in precious metal prices, there is also potential there. The share has already taken off and is available for AUD 0.085, giving it a favorable market capitalization of around AUD 55 million.

    Rheinmetall - Running like clockwork

    The defense industry is booming, boosting demand for vanadium, which is known for its exceptional ability to harden and strengthen steel. Vanadium is used in a variety of military applications, from armor steel to missile casings. In a time characterized by an increasingly dynamic geopolitical environment, the strategic importance of vanadium for the defense industry is becoming ever more apparent. This also applies to Rheinmetall, whose order books are getting fuller and fuller. Tailwinds are coming from Europe.

    President of the EU Commission, Ursula von der Leyen, is calling for a significant expansion of European defense capacities in the face of global security risks. She is calling for increased spending, European cooperation and joint purchases of armaments in order to strengthen independence and planning security. The European Commission is proposing that at least 50% of defense spending should take place in the EU internal market by 2030 and is offering financial incentives for joint projects. It is also considering EU investment in military production. The Company would certainly benefit from this.

    But it is not only in the defense sector that things are going well. On March 6, the Düsseldorf-based company secured a significant order from a leading car manufacturer. Rheinmetall is set to supply electric oil pumps worth the equivalent of a low three-digit million amount. Production will commence in May. Given the order situation and the promising prospects, the share price performance is not surprising. Since early October, the share price has risen by more than 90% at its peak. There was a slight setback for the first time last Friday. One share is currently available for EUR 421.80.

    Vanadium is needed in two growth sectors. Demand is more likely to rise than fall in the near future. Energy storage has even become a business area of its own for Encavis. It remains to be seen whether the takeover will take place, and if it does, then probably at prices higher than EUR 13. Exciting days lie ahead for Manuka Resources. If the new New Zealand government gives its GO for the vanadium-titanium-magnetite-iron sand project, the Company will suddenly no longer be a precious metals company and will likely be revalued. Rheinmetall can hardly save itself from orders, and the EU is also sending signals of further upgrading. An end of the boom is not in sight, but one should wait for a major setback before investing.

    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

    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

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