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November 30th, 2023 | 07:00 CET

Growth Industries in Focus: Investors see potential in Defense Metals, BASF and Volkswagen shares

  • Mining
  • Tungsten
  • RareEarths
  • Electromobility
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Investors are looking for opportunities in growing markets. Looking at industries currently requiring rare earths - such as energy, defense, electromobility, and many more - leads to the mining sector. Someone has to supply the valuable raw materials so these industries can continue growing. Defense Metals' Wicheeda project in Canada shows promising results, particularly the increase to 6.4 million tons with a TREO content of 2.86%. BASF secures EUR 124.3 million in government funding for a green hydrogen plant in Ludwigshafen, planned in collaboration with Siemens Energy. Volkswagen is facing challenges, emphasized by VW board member Thomas Schäfer, who announced tough cuts to maintain competitiveness without closing plants. Volkswagen will have to respond to change with a more agile approach, especially as China advances in electromobility.

time to read: 4 minutes | Author: Juliane Zielonka

Table of contents:

    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG

    Full interview


    Defense Metals: Investment opportunity in Canada's promising resource future

    Investors are searching for profitable opportunities in growing markets. To mitigate risk, portfolios are diversified to protect against fluctuations in these markets. One of the greatest investors, Charlie Munger, passed away this week at the age of 99. The business partner of Warren Buffett had a unique ability to envision future scenarios and invest in good time. What will be more in demand in ten years than today? Which companies will grow and with them their business profits? Those contemplating supply chains of the automotive, renewable energies, defense and aviation industries will inevitably come across raw material explorers and producers that serve various industries with rare earths, for example. Industries that offer enormous growth and, consequently, return potential.

    One such commodities company is Defense Metals. The Company is dedicated to exploring and developing its Wicheeda project in British Columbia, Canada. The project focuses on providing critical metals for defense, security and renewable energy. Rare earths are mainly found in magnets in wind turbines and in electric vehicle motors.

    The latest Mineral Resource Estimate (MRE) for Defense Metals' Wicheeda Rare Earth Element (REE) Project presents impressive figures that point to a promising future. The measured mineral resources amount to a significant 6.4 million tons, with the average grade of Total Rare Earth Oxide (TREO) reaching an impressive 2.86%.

    Total Measured and Indicated (M+I) Mineral Resources of 34.2 million tonnes, averaging 2.02% TREO, is a significant upgrade representing a conversion of 101% of the 2021 MRE to M+I.

    The 2023 MRE marks a 17% increase in metal-based TREO or a 31% increase in tonnage compared to the previous 2021 MRE. These new results are based on an updated geological model that includes an additional 10,350 m of drill hole data from 45 holes successfully completed by Defense Metals in 2021 and 2022.

    Defense Metals offers a promising investment opportunity with the Wicheeda project in British Columbia, which brings growth thanks to booming industries.

    BASF receives millions in financing for green hydrogen plant in Ludwigshafen

    The German chemical company BASF SE has received official financing commitments of EUR 124.3 million for a planned green hydrogen plant at its headquarters in Ludwigshafen. The project can, therefore, move into the construction phase.

    The financing is being provided by the German Federal Ministry of Economics and Climate Protection, with the state of Rhineland-Palatinate providing up to EUR 37.3 million of the total amount. Therefore, the German taxpayer is ultimately responsible for this commitment.

    The 'Hy4Chem-EI' project involves the installation of a 54 MW proton exchange membrane electrolyser, which will have a capacity of up to 8,000 tons of hydrogen per year using electricity from renewable energy sources. The intriguing detail for investors is that the project partner is Siemens Energy, a company currently facing challenges due to its troubled acquisition of Siemens Gamesa wind turbines.

    BASF will use the majority of the turbine production as a raw material to decarbonize its chemical production processes. A portion will also be used for transportation in the Rhine-Neckar metropolitan region. The electrolyser in Ludwigshafen is expected to be one of the largest of its kind in Germany. Commissioning is scheduled to start as early as 2025.

    Hydrogen is crucial for chemical value creation. In Ludwigshafen, BASF requires 250,000 tons annually, previously associated with high CO₂ emissions. The CO₂ footprint is significantly reduced here. The promotion of low-emission hydrogen technologies, such as water electrolysis and methane pyrolysis, is part of its commitment to the hydrogen economy.

    Chinese competition ahead: VW plans drastic measures to remain competitive

    Whether the heavens can intervene at Volkswagen remains uncertain. However, at least the Vatican and the Pope will be driving electric vehicles from Volkswagen in the future. VW board member Thomas Schäfer made a surprisingly clear statement this week on the brand's critical situation. "With many of our current structures, processes and high costs, we are no longer competitive as the VW brand," he told Spiegel-Magazine.

    At the general meeting in Wolfsburg, he announced tough cuts, stating that VW is no longer competitive with existing structures and high costs. Schäfer noted that competitor manufacturers would close plants in such situations. Volkswagen, however, is planning a different approach, albeit one involving significant personnel reductions. In turbulent times like these, German engineering skills are not so much in demand, as Chinese manufacturers are already much further ahead in their EV technology and pricing policy. Consumers in the EU are also more likely to opt for hybrids than pure electric mobility due to the lack of infrastructure. It is time for the Volkswagen Group to adopt some of the agility that China has already mastered.

    Defense Metals Corp. reports promising results for Canada's Wicheeda Rare Earth Element (REE) project. With 6.4 million tons grading 2.86% Total Rare Earth Oxide (TREO) and total Measured and Indicated resources of 34.2 million tons (2.02% TREO), the project shows a significant increase over previous measurements. The figures are based on updated data and offer promising opportunities for investors in the growing demand for rare earths. BASF receives EUR 124.3 million in government funding for its planned green hydrogen plant in Ludwigshafen. The 'Hy4Chem-EI' project, in collaboration with Siemens Energy, includes a 54 MW electrolyser to produce 8,000 tons of hydrogen annually. Commissioning is planned for 2025. Volkswagen faces significant challenges, as emphasized by VW board member Thomas Schäfer. The VW brand is no longer competitive, and tough cuts are necessary. In contrast to other manufacturers, VW plans to avoid plant closures. The German car manufacturer wants to tackle the critical tasks, including staff reductions.

    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

    Juliane Zielonka

    Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.

    About the author

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