Close menu

October 2nd, 2023 | 08:25 CEST

First Phosphate, Volkswagen, Varta - Battle for battery raw materials picks up speed

  • Mining
  • phosphate
  • Batteries
  • renewableenergies
  • Electromobility
Photo credits:

The global demand for electric vehicles is steadily increasing, driving the need for battery raw materials. However, the battle for these coveted raw materials has political consequences, particularly concerning the strained relations between the US and China. The US has recognized that it is heavily dependent on China for access to key battery raw materials, which has led to tensions between the two countries. The US is working to reduce these dependencies. This is reason enough to examine three companies that rely on battery raw materials.

time to read: 5 minutes | Author: Armin Schulz

Table of contents:

    Terry Lynch, CEO, Power Nickel
    "[...] The collaboration with CVMR offers two primary advantages for Power Nickel: We can cover a larger portion of the value chain in the future, and despite the extensive cooperation with all its positive outcomes, we have remained significantly independent. [...]" Terry Lynch, CEO, Power Nickel

    Full interview


    First Phosphate - USD 170 million Letter of Interest

    Lithium iron phosphate (LFP) batteries are becoming increasingly popular thanks to their high safety and durability. This applies not only to electric vehicles but also to freight transport and the energy storage market. China is the leader in LFP cell production and dominates the upstream supply chain. To ensure more independence from China, investments are necessary. In this regard, it is advisable to consider manufacturers like First Phosphate, whose phosphate comes from anorthosite igneous phosphate rock, known for its high purity and battery suitability. These phosphate deposits account for only 1% of the world's phosphate. This has not escaped the attention of the Export-Import Bank of the United States (EXIM).

    On September 29, First Phosphate announced that it had received a Letter of Interest (LOI) from EXIM to provide financing assistance of up to USD 170 million. In doing so, EXIM aims to protect American jobs and support projects that need help getting loans in the current environment. EXIM will conduct due diligence before making a final commitment. If the decision is favourable, more than 30% of the investment costs would already be financed before the start of production. On September 13, the Company signed a letter of intent with American Battery Factory (ABF) to produce up to 40,000 tons of LFP cathode material per year.

    ABF President Major General John S. Kem said, "Raw material shortages, not technology, will be the biggest obstacle to introducing fully localized LFP batteries in North America." He is likely correct, especially when looking at phosphoric acid production in the United States in recent years. It has been steadily declining, yet demand continues to rise significantly in the coming years due to electrification. The battle for battery resources has long since begun, even if it is not yet visible everywhere. After the announcement on Friday, the stock price shot up and closed trading at CAD 0.33.

    Volkswagen - Struggling with many problems

    Automakers like Volkswagen were among the first to experience what it means to be dependent on China. When the supply of semiconductor chips from Asia dried up, the assembly lines were partially at a standstill. In the meantime, the chip crisis has been overcome, but things are still not running smoothly at Volkswagen. On September 27, production was again brought to a standstill at several locations due to an IT glitch. The reason given was a faulty data package originating from Group headquarters. The problem was rectified on the same day. It was also recently announced that the Trinity plant in Wolfsburg, which would have cost EUR 2 billion, will not be built. Instead, the Trinity model will likely be manufactured in Zwickau in the future.

    In any case, the entire production infrastructure is currently being put through its paces. The shift to electric vehicles requires a rethink. Demand for electric vehicles in Europe has declined recently due to high inflation, increased interest rates, charging infrastructure, lack of range and poor resale prices. Accordingly, production in Zwickau and the Gläserne Manufaktur in Dresden is being scaled down for the time being. Since the Company has also recently lost market share in China and alarm signals are also coming from North America, the sales targets may have to be adjusted again.

    According to Handelsblatt, however, the problem in North America is not raw materials but a lack of rail cars and train drivers. The VW plant in Mexico has long routes to the US, and it seems some railroad companies have let Volkswagen down. An insider reports approximately 30,000 undelivered vehicles. This is a challenging situation for the Company because sales figures in the US have climbed significantly recently. In September, there were 4 buy recommendations for the share, 2 analysts advised holding, and UBS even issued a sell recommendation. The price targets were between EUR 100 and EUR 193. At last count, one share cost EUR 108.94 on Xetra trading.

    Varta - Unfortunate performance

    Varta AG was once considered the German hopeful for the future of the battery industry. However, in recent years, the Company has experienced a decline triggered by several factors. These include increased competition in the industry, customer reluctance to buy due to Corona, later exacerbated by rising inflation, and significantly increased energy costs in Germany. In addition, the hopeful V4Drive cell failed to live up to expectations, causing the stock to fall by more than 90% at its peak since 2021. Just like the previous year, the management had to make downward revisions to its forecasts this year.

    Varta is also not presenting a favorable image in other respects at the moment. On September 27, the Company announced that supervisory board member Martin Ohneberg had purchased shares worth EUR 160,362.27. In principle, it is positive when board members buy shares, as it reflects confidence in their own company. The problem in this case is that Mr. Ohneberg sold the shares. By the time the correction announcement was out, the stock market had already closed. In capital market circles, there is speculation as to whether another profit warning will be issued before the next quarterly figures and whether another capital increase will be necessary.

    On September 28, the Company announced it was working on two research projects to advance renewable energy storage. The energy storage market is quite lucrative; however, currently, the Group is buying the storage solutions and merely branding them with its name. The research projects are to be completed by January 31, 2026, and it will take as long as 2030 before they are ready for series production. The fact that one project is being funded by the German Federal Ministry of Education and Research is at least easy on Varta's wallet, but it may not provide immediate benefits to the Company. The share nevertheless reacted positively and left Xetra trading on Friday at EUR 18.145.

    As a producer of battery raw materials, a golden future awaits. Demand is increasing, and alternatives are needed to reduce dependence on China. High-purity phosphate could be supplied by First Phosphate in the future, and there are efforts by several US institutions to collaborate with the Canadians. For Volkswagen a new era has begun with electric mobility, and the old structures have to be adapted. Here, the raw material problems of the future are only part of the big overall task. Likewise, at Varta, it is not the lack of raw materials that is the problem, but the sharp rise in costs and the slump in demand.

    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.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.

    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

    Related comments:

    Commented by André Will-Laudien on May 21st, 2024 | 07:30 CEST

    Blackout ahead! Artificial intelligence becomes a power problem: Plug Power, Nel ASA and Carbon Done Right Developments

    • Sustainability
    • renewableenergies
    • AI
    • CarbonCredits

    OpenAI has unveiled a new version of ChatGPT that communicates more humanely than any AI before it. Google is also rebuilding its search engine and will answer queries with AI-generated summaries in the future. According to experts, the boom in such tools could soon lead to network overload or even a blackout. This is because AI applications consume an enormous amount of power in data centers. The energy consumption of an AI-generated question differs from a normal search engine entry by up to a factor of 10. This puts the energy transition at risk, as full electrification will require more and more electricity for electric vehicles, heat pumps and electricity-based industrial solutions, which politicians want to come from renewable energy sources. However, the International Energy Agency predicts that the electricity demand will increase by 80 to 150% by 2050. The stock market evaluates energy companies according to their return potential without any ideological bias. Where are the opportunities for investors?


    Commented by Armin Schulz on May 21st, 2024 | 07:15 CEST

    K+S, Globex Mining, Barrick Gold - Commodity stocks: Make money now

    • Mining
    • Gold
    • Commodities
    • fertilizer

    The commodities market in 2024 is characterized by high volatility, driven by strong demand, supply bottlenecks, and technological shifts to renewable energy, which make lithium and copper, for example, more expensive. In addition, inflation concerns make precious metals attractive as a hedge against inflation, while the central banks' interest rate policy is also a factor. Geopolitical tensions further disrupt supply chains and drive up prices. In this context, investments in commodity shares are becoming increasingly important. This form of investment allows investors to benefit indirectly from price fluctuations and the increase in the value of commodities without having to physically invest in the commodities themselves. We are, therefore, looking at three commodity companies today and analyzing their potential.


    Commented by Stefan Feulner on May 21st, 2024 | 07:00 CEST

    Lynas, Almonty Industries, General Motors - Is the trade war escalating, and what is Tesla doing?

    • Mining
    • Tungsten
    • Electromobility
    • RareEarths

    The stock markets continue their record-breaking run. The Dow Jones Industrial has climbed to the 40,000-point mark for the first time in its history, and the DAX is also on the verge of breaking through the 19,000-point barrier. So far, so good, one might say. However, something is brewing in the background with regard to the trade war between the US and China, which could put enormous pressure on company margins in the future. As a result, critical commodities, in particular, are likely to be on the verge of a strong upward impulse.