November 10th, 2022 | 11:12 CET
Kodiak Copper, BYD, SolarEdge Technologies - Copper driving the energy transition
Goldman Sachs forecasts a gap of copper on the world market equivalent to about 8 million tons. The reason for the shortage is the high demand due to electrification in the areas of mobility, energy supply and renewable energies. Companies such as BYD and SolarEdge, pioneers of the energy transition, use vast quantities of the coveted metal in their technical solutions. In the last 10 years, the raw materials market has focused on other metals. Kodiak Copper, on the other hand, has taken advantage of this time and secured large areas of copper mineralization in North America, the drilling of which is promising. A strategic move that is now paying off...
time to read: 4 minutes
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Author:
Juliane Zielonka
ISIN:
KODIAK COPPER CORP. | CA50012K1066 , BYD CO. LTD H YC 1 | CNE100000296 , SOLAREDGE TECHN. DL-_0001 | US83417M1045
Table of contents:
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Author
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.
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Kodiak Copper - Copper in hot demand on the world market
Electric cars from brands like BYD and Tesla have one thing in common: they have more copper installed than conventional cars with combustion engines. That is because copper is an essential component used in electric motors, batteries, wiring and charging stations. Estimates show that demand for copper will increase by 1,700 kilotons by 2027 due to electric vehicles.
Kodiak Copper is a copper exploration company in North America that understands that demand for the coveted metal will continue to grow. Whether renewable energy or EV expansion, copper is desperately needed, and this has had a significant impact on the price of copper. The current price of copper is USD 3.65 per pound as of November 09, 2022.
In the last decade, it was the other way around: the price of copper was low, so few exploration projects were launched. Now a bottleneck is emerging that Kodiak Copper is taking full advantage of because in order to build mines, copper must first be found.
Goldman Sachs Group Inc. estimates that mining companies will need to invest about USD 150 billion over the next decade to address an 8 million t copper deficit. BloombergNEF forecasts that the production gap could reach 14 million t by 2040.
Under the leadership of CEO Claudia Tornquist, the team at Kodiak Copper have already made one copper discovery of significant size in the Gate Zone located just three hours from Vancouver. With numerous other targets to test, Kodiak Copper is poised to make more game changing copper discoveries. The discovery has already attracted strategic investors such as Teck Resources. Kodiak Copper's drilling programs are thus fully funded in 2022. This year, the Company has initially focused on further drilling at the Gate Zone and is reviewing similar geophysical targets in the immediate area. New copper-gold-silver intercepts were reported, closing a 170-meter gap at the south end of Gate. In addition, drilling to test geophysical anomalies northeast of Gate identified a 400-meter parallel mineralized trend in the nearby Prime Zone. That gives Kodiak Copper a strong competitive advantage in the battle for the highly sought-after metal.
BYD - New EV premium model for luxury enthusiasts
Leading the way in electric mobility is Chinese automaker BYD. Thanks to additional incentives from the Chinese government, the Company is now focusing exclusively on building and further developing EVs. Cars with combustion engines have now been removed from the program. According to Reuters, the Company's sales more than tripled in the first 10 months of this year, reaching 1.4 million vehicles. The group plans to launch a new luxury car in Q1 2023. Cost per vehicle: EUR 140,000.
China's largest electric vehicle manufacturer can also boast that its net profit in Q3 2022 increased by 350% YOY. This is due to a broader product offering and strong sales that allowed the Company to beat Tesla, among others, in the world's largest car market. The latter's CEO is rather busy with Twitter at the moment, selling Tesla shares to be a bit more liquid.
BYD's net profit for the July-September quarter reached 5.72 billion yuan (USD 788.75 million), while for the first nine months it rose 281% to 9.31 billion yuan, the Company said in a stock market report on Friday. The EV sector is only one part of the group's business. **With the further promotion of IoT, 5G and AI applications, the group's three major business areas will maintain good development momentum. The demand for copper here is unbroken.
SolarEdge - Smart energy solutions made in Israel
Israeli company SolarEdge is a winner in the current gas crisis that has Europe firmly in its grip. SolarEdge is driving the development of smart energy, covering a wide range of market segments with its solutions for PV, storage, electric vehicle charging, batteries, UPS, electric vehicle drives and grid services.
Sales in Europe were up 90% in the third quarter compared to the same quarter last year. In Germany, sales were up as much as 125% from the previous quarter. Shares of SolarEdge Technologies rose more than 10% in after-hours trading after the Company reported its third-quarter results. Revenue of USD 836.7 million (up 59% YOY) was above the consensus estimate of USD 826.36 million.
Earnings per share were USD 0.91, compared to the consensus estimate of USD 1.47. Solar segment revenue increased 65% YOY to a record USD 788.6 million
SolarEdge CEO Zvi Lando thinks the strong growth momentum will continue in 2023. "During the quarter, we prioritized shipments to Europe after the expected difficult winter," Lando explains, saying that the primary market in Europe is the family market. As a result, sales fell 19% quarter-over-quarter to USD 252 million, although the Company expects continued growth in the US retail market over the next year.
Analysts at Wells Fargo Bank raise the stock's target price from USD 283 to USD 306 due to the high demand for smart energy solutions.
The global economy is facing an upheaval in energy supply. In order to further reduce CO2 emissions, the focus is increasingly on electrification. Whether electromobility or renewable energies - demand for copper will continue to increase, and the stable copper price proves how valuable the metal has already become. It takes at least 10 years to build up a mine. Kodiak Copper has already done pioneering work and discovered large areas of copper. Current drilling indicates high deposits. This will allow companies like BYD and SolarEdge to further commercialize technologies that will make investors' hearts beat faster.
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