14. January 2021 | 17:34 CET
Geely, Nevada Copper, Xpeng - Invest in the future!
If you think investing in future technologies like blockchain, hydrogen or electric mobility will offer the most significant returns in the coming years, you could be wrong. These new technologies, in particular, require raw materials and metals that are already in short supply. The sales forecasts for electric car manufacturers, for example, point to one thing for the next few years: a shortage of raw materials. This shortage will lead to a drastic excess in demand and thus to exploding prices. The decade of raw materials!
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ISIN: CA64128F1099 , KYG3777B1032
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Boom accelerates demand
Politicians and the industry's decision to focus on electromobility in the future is placing an enormous burden on the raw material supply chain. The base metal copper is also affected. We encounter copper in many areas of life - in information and communications technology, electrical engineering, and renewable energies. According to studies by IDTechEx, the introduction of electric motors in vehicles will lead to a significant increase in copper demand. By 2030, more than 250,000 tons of copper per year will be used as part of the windings in electric motors.
Full speed ahead
It is not for nothing that the copper price is currently at a multi-year high. If professional market observers are to be believed, the metal is likely to double in the next few years. You can profit from the rising copper price by investing in promising mining projects. The Canadian copper producer Nevada Copper has recently attracted attention with good news. The Company, which has been active since 2007, is searching for metals in its own Pumpkin Hollow copper project in the US state of Nevada, not far from the headquarters of Tesla and Google. Pumpkin Hollow has significant reserves and resources, including copper, gold and silver. The Company's two fully-permitted projects include the high-grade deep mine and processing plant, which are now in production, and a sizeable open-pit project where progress has been made toward feasibility.
The cap is off
In the past, Nevada Copper's high debt-to-equity ratio has been the drag. Now the Company announced the successful completion of a capital increase. Due to enormous investor demand, the placement increased from the original CAD 21.5 million to CAD 33.0 million. The capital raised is to be used to repay outstanding liabilities and for the construction or expansion of the Company's Pumpkin Hollow underground mining project. Currently, the market capitalization of Nevada Copper, which is also traded in Germany, is just under EUR 185.0 million. A bet on the rising copper price.
The electric car market is in full swing. After Apple and Baidu threw their hats into the ring, the next marriage ceremony is taking place. The long-time Apple supplier Foxconn and the Chinese automaker Geely are entering into a partnership. The joint venture is to be split 50/50. Foxconn fills three positions on the five-member board, including the CEO post, while Geely provides two board members. The goals are quite ambitious. According to the announcement released by both companies, the joint venture is intended to "revolutionize the model of the automotive industry." The information and communications technology will be used to help automakers "accelerate the transition to new innovative and efficient manufacturing processes and business models based on CASE (Connected, Autonomous, Shared and Electrified)
Money from above
China has declared the expansion of electric automobility in the Middle Kingdom a top priority. To this end, exact infrastructure specifications have been drawn up in recent months. The electronics manufacturer Xpeng is now receiving working capital for this purpose. The three major banks, namely China Development Bank, Bank of China, and the Agricultural Development Bank, give the young Company a new credit line equivalent to almost EUR 1.62 billion. The new credit line will help Xpeng meet the high demand for electric vehicles. Due to the announcement, the shares of Xpeng climbed in double digits at times. However, in yesterday's session, they gave back half of the gains. Currently, the share price is quoted at USD 52.00.