Mercedes-Benz, XXIX Metal, D-Wave Quantum - Copper shortage: Is a bottleneck looming due to new technologies?

Mercedes-Benz – Electromobility: Challenge and driver of the future

Electrification presents Mercedes-Benz with significant challenges. In particular, the increased demand for copper for electric vehicles, which is about two and a half times higher than for combustion engines, is a burden for the Company. The limited global copper resources and persistently high raw material prices increase the pressure on production costs. In the long term, supply bottlenecks could slow down the switch to electromobility, as copper is one of the key materials. At the same time, technological innovations and government subsidies offer opportunities to accelerate the transformation. Experts see recycling strategies and efficiency improvements as key measures for overcoming these challenges.

The stock market year 2024 was disappointing for Mercedes-Benz. The stock lost around 30% of its value from its 52-week high of EUR 77.45 and is currently trading at around EUR 54. This decline reflects weak sales performance, particularly in key markets such as China. In the second quarter, revenues fell by 7.18% to EUR 34.53 billion, accompanied by a decline in earnings per share. Nevertheless, Mercedes-Benz remains attractive with a stable dividend policy: a payout of EUR 4.38 per share is expected for 2024. Despite the headwinds, analysts remain optimistic about the long-term potential of the stock.

To remain future-proof, Mercedes-Benz is focusing on electrification and expanding its premium segment. The entire fleet is to be converted to electric drives by 2030 – an ambitious goal that company boss Ola Källenius would like to see supported by the state. Targeted innovation projects such as the in-house operating system MB.OS and sustainable battery recycling programs underscore the focus on efficiency and resource conservation. Analysts emphasise the strategic realignment and see the share price target at EUR 69 in the medium term.

XXIX Metal - New copper power in Canada

XXIX Metal, named after the atomic number 29 of the element copper, was formed from the merger of QC Copper and Gold and CPRAM. The Canadian company is focused on the development of two significant copper projects: Opemiska in Québec and Thierry in Ontario. While Opemiska boasts massive copper deposits in open-cast mining, Thierry has the largest copper resource in Ontario. With a combined 4.8 billion pounds of copper equivalent, the Company is one of the major players in the copper market. Thanks to the excellent infrastructure in both regions, development and operating costs can be kept low – a decisive competitive advantage for the future.

The geological data for Opémiska and Thierry offers significant expansion opportunities. Opémiska, a former underground mining area, now contains 97.5 million tonnes of ore with a copper equivalent of 0.97%, or approximately 2.1 billion pounds. This potential is to be realised through open-pit mining. Thierry, on the other hand, contains unexplored mineralization that could allow for further growth at depth and along the veins. In total, four gold zones have been identified so far, which can be mined both in open-pit and underground operations. Pre-feasibility studies are already underway for both projects, which are key prerequisites for preparing the path towards production and increasing the Company's value.

XXIX Metal is financially robust, with an experienced team of mining and finance professionals and CAD 9 million in working capital. Management is pursuing a focused growth strategy: expanding resources, de-risking and advancing the projects. This is happening against the backdrop of a global copper boom fuelled by the energy transition and new technologies. Investors could thus benefit from a potential increase in value as soon as the upcoming pre-feasibility studies are published. XXIX Metal's shares, currently trading at CAD 0.12, have been tradable in Frankfurt since December 19 and should be familiar to any copper investor.

D-Wave Quantum – A quantum leap or speculation?

The world of quantum computing is experiencing a remarkable hype. Companies in this sector are seeing rising share prices, driven by high expectations and technological progress. Copper plays a central role here. As the key material for qubits – the basic computing units of quantum computers – it has physical properties that are crucial to enabling processes such as spin manipulation and data storage. In addition, it is used in cooling technologies that ensure stable operating conditions. Nevertheless, the hype surrounding quantum computers could be speculative, but it remains a market with great potential.

D-Wave Quantum is considered a pioneer in the field of quantum computing and focuses on so-called quantum annealing technology. This method is particularly effective for optimization problems in logistics, financial planning and even drug research. With the new Advantage2™ processor (4,400 qubits), D-Wave aims to secure market share and advance practical applications. Despite strong competition – particularly from technology giants such as IBM and Google – the Company has a clear niche strategy. It offers marketable solutions and works with well-known partners such as NTT DOCOMO to further strengthen its position.

The outlook for quantum computing and D-Wave looks promising but not without risks. While advances such as lower costs or increased performance could favour the widespread application of quantum computers, the technology remains young and expensive.

D-Wave recently raised USD 175 million through a share issue to continue investing. Analysts are optimistic, with price targets between USD 3 and USD 7. However, whether the Company will become profitable in the long term depends on market growth and its ability to compete. Investors should keep an eye on both the opportunities and uncertainties of the quantum revolution. The stock was recently catapulted to USD 10.50 and is currently consolidating at USD 7.34.

The increasing demand for copper is driving industry and technology but also poses challenges. Mercedes-Benz faces a significantly increased demand for copper due to the electrification of its fleet, while XXIX Metal is well positioned to serve the commodities market with its Canadian projects Thierry and Opemiska. At the same time, copper remains essential for D-Wave Quantum, as it is needed as a key material in quantum computers. While Mercedes-Benz and D-Wave benefit from long-term visions, XXIX Metal scores with resource strength. Overall, this illustrates the central role of copper – however, a bottleneck could slow down the pace of innovation.