July 13th, 2023 | 08:00 CEST
Germany on the brink - what needs to happen now: JinkoSolar, Siemens Energy, Defiance Silver
Table of contents:
"[...] Internally we expect the resource to significantly grow the deeper we mine. [...]" Dennis Karp, Executive Chairman, Manuka Resources
JinkoSolar and Co.: We only see the taillights
When comparing the growth of investment volumes in Germany with figures for the US or Great Britain, the precarious situation of the Federal Republic becomes even clearer. In the United States, investment is expected to increase by 3.7% by 2024, and in the United Kingdom by as much as 7.2%. Even Japan, long considered sluggish, is turning up the heat with an increase of 4.2%. While experts say the differences are not yet "dramatic," the country faces the threat of "persistent investment weakness." The consequences of a lack of investment can currently be seen in the photovoltaic industry. Here, Chinese manufacturers such as JinkoSolar have overtaken the German competition, which was still strong more than ten years ago: Modules from Asia are considered better and cheaper. Only the complex commissioning and maintenance of inverters from the Far East are still an argument for software and documentation from German production. However, even in these areas, providers like Huawei have pulled ahead in terms of price. Additionally, once a photovoltaic system is up and running, customers can usually overlook the confusing menu navigation and occasional rough translations.
Siemens Energy under pressure - Are opportunities arising?
But what must happen to ensure that Germany is not left behind and that the weak forecasts for investment activity remain temporary? In addition to planning security for investments, the acceleration of approval procedures and the reduction of bureaucracy with the simultaneous expansion of digitalization is likely to be a significant factor. International investors simply cannot comprehend that renting a minibus is necessary to transport the required documents to the authorities to approve wind turbines. Cooperation with international companies could also help Germany move forward.
The EU recently agreed on stricter investment rules from countries such as China. In the future, EU companies will be involved to a greater extent than before in joint ventures. This may open up the opportunity to regain a foothold in industries where the competition seems to have slipped away. For example, there is repeated speculation that Siemens Energy could be a welcome partner for Chinese investors in the photovoltaics sector. So far, Siemens Energy is only marginally betting on solar energy. After the disaster with the wind power subsidiary Gamesa, establishing a new foothold would benefit the Company. After the crash of the share, investors can monitor the value. Siemens Energy remains one of the beneficiaries of increased investment activity in Germany, even though, as often seen in Germany, it may gradually gain momentum.
Defiance Silver: Electrification metals silver and copper from Mexico
The share of Defiance Silver has also picked up a bit of momentum in recent weeks. The Canadian company operates in Mexico and is advancing several projects there. Contrary to what the share price suggests, Defiance Silver is already quite far along with its Tepal project, offering a resource estimate of 1.8 million ounces of gold and 813 million pounds of copper at grades of 0.3 g/t gold and 0.2% copper. The resource estimate also shows notable silver deposits. Copper and silver are considered electrification metals, used in cables, inverters and PV modules. Since Defiance Silver also reports 16.9 million ounces of silver on the less advanced San Acacio project (inferred category), the stock can be considered a potential beneficiary of electrification.
On San Acacio, Defiance Silver also released drill results a few weeks ago and reported, among other things, close to 16 m with grades of 379.9 g/t silver. At the peak, grades on sub-intercepts climbed to 5.5 to 6 kg per tonne. "We are very pleased by the continued success of our drilling campaigns at the San Acacio Project. As a result of careful target acquisition and modeling work leading to several successful phases of drilling, our technical team has demonstrated the continued potential to delineate a large mineral system within the historic San Acacio mine area on the Veta Grande vein system. We look forward to reporting further results as they become available," commented Chris Wright, Chairman and CEO of Defiance.
Given the investment backlog, German companies can be glad that new projects are being launched in other regions of the Western world. Ultimately, German industry should also benefit from these. Nevertheless, measures are needed in Germany in order to be able to compete internationally as well. Siemens Energy seems well-positioned to do so. Those who like it more speculative can also take a closer look at securities such as Defiance Silver. As the World Silver Survey 2023 shows, demand for silver from the PV industry is growing consistently at double-digit rates.
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