Freyr Battery, Auxico Resources, Plug Power - Rare earth battery boom in e-Mobility

Freyr Battery - Polish commercial vehicles in the future with clean Freyr batteries

Following a series of major orders last month, Norwegian company Freyr Battery has an impressive order book of more than 130 GWh focused on automotive mobility and energy storage. The developing battery company aims to build a global production base for lithium-ion batteries. The credo: to provide clean battery solutions on an industrial scale to reduce emissions globally.

Freyr Battery's latest customer is Impact Clean Power Technology, a Polish manufacturer of battery systems for heavy-duty vehicles. Similar to Chinese competitor BYD, Freyr's first focus in the e-mobility sector is B2B.

In their framework agreement, both sides have fixed the purchase of a volume of 10 to 14 GWh from 2025 to 2030. This involves LFP cells based on the SemiSolid platform from 24M Technologies, which are to be produced at Freyr's battery cell factory in Mo i Rana, Norway, called Giga Arctic. The new factory's assembly lines are scheduled to start in the first half of 2024.

"Why not until 2024?" investors are asking. Things have not always gone smoothly in the metal procurement sector in recent months. Problems in procurement logistics, including disruptions at key copper mines in South America, as well as low inventories for a number of industrial metals, continued to cause difficulties around the world last year. These factors, combined with expected rising metal demand following the lifting of China's zero tariff policy, are sending prices up across all sectors. The signs are favourable for a manufacturing company like Auxico Resources, as demand for rare earths to produce clean batteries is steadily increasing.

Auxico Resources - An alternative for rare earths and metals outside China

Auxico Resources is a Canadian company founded in 2014 that specializes in producing critical minerals and precious metals, including niobium, tantalum, platinum group metals (such as platinum and iridium), and rare earth metals. The mineral exploration company is the exclusive commercial agent for rare earth concentrates from the Democratic Republic of Congo and has direct or joint venture mineral rights in Colombia, Bolivia, and Brazil. With access to nearly 4 million tons of critical minerals and rare earths, Auxico has one of the largest deposits outside of China, with average rare earth oxide (TREO) grades ranging from 54% to 63%.

Demand for so-called REEs (rare earth elements), which are used in such applications as Freyr batteries in electric vehicles and advanced technologies, is expected to increase 12-fold in 2050. In order to meet the climate targets of the Paris Agreement, the demand is enormous. China is a near monopolist in the global market, controlling over 81% of the supply of all REE metals. Thanks to Auxico, sourcing companies have a reliable alternative should trade relations escalate further. Amid increasing geopolitical tensions between China and Taiwan, the US, Australia, Canada and other nations are seeking to reduce their dependence on China as a source of rare earth production and processing.

Plug Power - Commercial vehicle manufacturer Nikola converts to hydrogen fuel cells

When institutional investors buy stocks in a big way, it often has a trailing effect. This week was no exception with Plug Power. DNB Asset Management increased its stake in Plug Power, according to Barron's, and now holds a whopping 2.1 million shares since Q4/2022 in the US hydrogen fuel cell company.

Norwegian financial services group DNB Asset Management is one of the leading asset managers in the Nordic region and manages various investment strategies, including discretionary mandates in Nordic and global asset classes. These include long-only equities, long/short equities, investment-grade and high-yield corporate bonds, multi-assets, multi-manager portfolios and alternative investments.

In addition, Nikola announced it had received a letter of intent to order 100 Class 8 Tre heavy electric vehicles from GP Joule. Investors are honoring this news, sending Plug Power's stock price soaring as Plug Power and Nikola agreed to a hydrogen supply contract in December 2022. Nikola is a leading designer and manufacturer of battery electric commercial vehicles (BEVs), fuel cell electric vehicles (FCEVs) and energy infrastructure solutions.

The contract sends a message to investors that demand for hydrogen-powered cars continues unabated - a development that will benefit Plug Power as it continues to build its hydrogen production capacity - as well as Auxico, which provides a successful rare earth alternative outside of China.

To enable Africa to identify and extract rare earths, scaling up exploration is critical. Auxico Resources is contributing to counterbalancing dominant China in the exploration, extraction and conversion of rare earths and other valuable metals. Demand continues to grow, as evidenced by the Freyr Battery and Plug Power deals. Plug Power, in particular, has continued to rise in favor of further investment from DNB Asset Management. It is time to upgrade the portfolio for the original sources of raw materials.