19. August 2021 | 11:37 CET
JinkoSolar, Central African Gold, NIO - Energy transition opportunity
With decarbonization and the drive to achieve carbon neutrality, the world is changing. There is a push for electrification and a shift away from fossil fuels. Transitions create opportunities. This transition will require massive additional quantities of copper, cobalt and nickel, whether for electric vehicles, solar, hydro or wind technologies. New industries are emerging that are still in the early stages of a long-term transformation. Seize the opportunity!
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ISIN: JINKOSOLAR ADR/4 DL-00002 | US47759T1007 , CENTRAL AFRICAN GOLD INC. | CA1523761098 , NIO INC.A S.ADR DL-_00025 | US62914V1061
"[...] The processes in Namibia are predictable and the country itself is very safe. [...]" Heye Daun, President and CEO, Osino Resources Corp.
Central African Gold - Potential recognized
Through the green revolution, metals are taking over the strategic role that oil had in the past. However, in addition to the required industrial metals such as copper, zinc or nickel, raw materials such as cobalt, rare earths and lithium, which are essential for batteries and digitalization, are in short supply. There is also the geopolitical component. The burgeoning trade conflicts between China and the USA are disrupting global supply chains. China, which owns about 80% of the production of most critical raw materials, controls the market and poses serious problems for Western industrialized nations in procuring scarce goods.
One of the most resource-rich countries for battery metals globally is the Democratic Republic of Congo (DRC). However, the country came under fire for reports of child labor and environmental pollution in the past, but the political climate has changed since then. In the new environment, acquisitions now need to be structured to treat all stakeholders fairly, and new projects also need to be environmentally and socially sustainable. The basic requirement for success in the DRC is the necessary experience and local knowledge of the interplay between business and politics. Central African Gold's commodity company has laid the foundation for developing and operating promising copper, cobalt and nickel projects by building an experienced local management team. Social aspects are to be integrated into each project.
In total, Central African Gold owns six mineral concessions covering a total area of 176 sq km, which includes both forests and farmland to support the generation of carbon credit revenues. Currently, the Canadian Company is evaluating generating cash flow from carbon credits on the land package. Carbon credits are an ideal solution to meet multiple ESG aspects in the DRC, most notably environmental sustainability, sustainable revenues, and social commitments regarding domestic job creation. The "CAGR Carbon Plan" will be set up with two internationally recognized leaders in carbon credit accreditation and project development.
In addition to the initiative to potentially implement carbon trading, Central African Gold announced a non-brokered private placement of up to 8,000,000 units at CAD 0.15 per unit. The gross proceeds of a maximum of CAD 1.2 million are to be used as general working capital.
JinkoSolar relies on "Made in Germany"
The fall of JinkoSolar's stock continues unabated. After reaching a high of around USD 90 last fall, the share corrected to USD 40 and broke through important support lines in the process. From a chart perspective, a further setback to USD 30 is possible. The reason for the slump is problems in the solar industry and the regulatory issues for Chinese shares. Material costs are rising and are thus putting pressure on the margins of producers.
A long-term polysilicon supply contract has now been signed with the German Company Wacker Chemie to reduce dependence on the Chinese domestic market. The agreement calls for Wacker to supply more than 70,000 tons of polysilicon to JinkoSolar from September 2021 to December 2026.
NIO - Attack on Tesla
Initially, Chinese electric carmaker NIO targeted the premium segment. Now the Company wants to enter the mass market and is planning a volume brand along the lines of Volkswagen, according to the trade magazine Automobilwoche. In doing so, NIO wants to build a better product than Tesla at a lower price, according to management. Despite good quarterly figures and an optimistic outlook, the NIO share is still in consolidation mode. In the long term, the Company appears attractive. However, the stock is likely to test the support at USD 34.50 once again in the short term.
Climate change is creating new industries and offers opportunities for good returns in the long term. Both JinkoSolar and the car manufacturer NIO are good opportunities to participate in the respective trends, but in the short term, there is still potential for corrections in both. Due to the high demand for commodities, interested investors should watch the stock of Central African Gold.