15. September 2021 | 14:03 CET
JinkoSolar, Defense Metals, Daimler - Sustainability only with rare earths
Rare earths are found in almost all new technologies such as smartphones, e-cars, etc. The leading supplier is China. Rare earths occur more often than one might think, but mining them is rarely economically profitable. Thus, China has a kind of monopoly position. With the trade dispute between the US and China brewing, more people realize that Western countries should seek alternative access to rare earths. If China limits exports, it would quickly lead to shortages. Accumulators or batteries would soon become scarce. Due to sustainability issues, the increased demand can already be seen in the increased prices for rare earths.
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ISIN: JINKOSOLAR ADR/4 DL-00002 | US47759T1007 , DEFENSE METALS CORP. | CA2446331035 , DAIMLER AG NA O.N. | DE0007100000
JinkoSolar - Figures at a glance
Time and again, in Germany, people do not know where to put the solar power they have generated. In some cases, it is even given away to neighboring countries so as not to overload the grid. A remedy could be electricity storage systems that temporarily store the electricity to be released when needed. There are already various projects in Germany in which many e-car batteries, some of them used, have been combined to form a 10-megawatt power storage system. Not only does this extend the service life of the batteries, but once the batteries have done their job, the rare earths they contain can also be recycled.
The Company has recognized this trend and, on September 2, announced cooperation with battery manufacturer Contemporary Amperex Technology, which will also focus on electricity storage. JinkoSolar presents its second-quarter figures today, which are eagerly awaited. Recently, there has been good news around the group. An agreement was reached with three competitors, agreeing on standards in M10 wafers. The hope is that standardization can increase margins in the long run.
With the US Department of Energy report, there is hope that the US will invest significantly more than planned in renewable energy, especially solar energy. The share has been very volatile recently and has currently formed a slight downward trend. A closing price above USD 56 could herald a possible trend reversal, but prices below USD 35.64 would accelerate the downward trend. As an investor, one should wait for today's figures.
Defense Metals - New drilling program started
Physically, it is not easy to invest in rare earths. One of the options is to buy shares from a rare earth producer. Defense Metals has proven rare earths on its 17sq km Wicheeda Rare Earth Project but is not yet in production. The following data can be drawn from the latest drill results: Mineral resources include approximately 4.9 million tons averaging 3.02% LREO (light rare earth oxide) and an inferred mineral resource of 12.1 million tons averaging 2.52% LREE (light rare earth elements).
As of September 8, the Company has commenced the next phase of the drilling program. It will build on the latest drill results, and the plan includes 32 drill holes with a total length of up to 5,000m. With the results from this diamond drilling, the Company expects to expand resources to become one of the leading deposits in North America. CEO Craig Taylor said, "Provided the preliminary economics are successful, we are well-positioned to move forward with the further advanced economics."
The Company expects very positive drilling results. It has already signed a letter of intent with Sinosteel Equipment & Engineering on August 10 to carry out processing tests and plan and develop a possible processing plant. Thus, management is prepared for anything. The stock has been running sideways for about two months. With the new drilling results, momentum could come into the share.
Daimler - High profitability
The International Motor Show is behind Daimler. Even if not all of the models presented convinced car enthusiasts, the Company is well prepared for the mobility revolution. More and more models are being electrified. The bottleneck, apart from the lack of chips, is the batteries. To counter this, Chief Development Officer Schäfer wants to present plans for battery factories in Europe in the near future. He left it open with whom a partnership will be sought.
The figures for the second quarter were convincing. 29% more cars were sold than in the same period last year, and sales increased from EUR 18.9 billion to EUR 28.2 billion. EBIT was over EUR 3.4 billion, following a loss of EUR 1.1 billion in the second quarter of last year. The return on sales was a proud 12.2%. CEO Källenius also sees this double-digit profitability in the future, even if e-cars are currently not yet as profitable as combustion engines.
The chip shortage is not expected to ease this year, lowering expectations for the upcoming quarterly results. The share has consolidated from EUR 80.41, the 200 moving average mark was defended, and a double bottom was formed in the process, which should be seen as bullish. The next resistance zone starts at EUR 76. The current dividend yield is 1.8%.
Even if rare earths do not mean much to many people, they are in all kinds of advanced technologies. So there is a need to ensure replenishment. JinkoSolar certainly will not be cut off from supply, as the Company sits at the source in China. Defense Metals could soon become a producer if drilling results are positive. One should watch this stock closely. Daimler wants to secure its own batteries and build factories with one or more partners. As long as rare earths are used in batteries, Daimler should also focus on this topic.