05. July 2021 | 15:37 CET
Nel ASA, Barsele Minerals, Nordex - The profiteers of climate policy!
June had to offer strong repetition effects to the last bull market in January and February. The typical stock market favorites made substantial gains again, especially the so-called "climate stocks." These are stocks whose business models fit into the decarbonization strategies of governments. On December 12, 2015, the Paris Protocol was adopted, and one year later, the international climate treaty came into force. A milestone of the agreement was that China and the United States also ratified it. Trump formally withdrew from the Protocol in November 2020, but his successor Joe Biden rejoined on February 19, 2021, while authorizing USD 500 billion per year by 2025 for climate investments.
time to read:
ISIN: NEL ASA NK-_20 | NO0010081235 , BARSELE MINERALS | CA0688921083 , NORDEX SE O.N. | DE000A0D6554
"[...] 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
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Nel ASA - Clear direction on climate policy
Nel ASA is arguably Norway's most prominent "climate export." Based in Oslo, the global Company is an expert in hydrogen production from electrical energy and its storage and distribution. The Company was founded in 1927, the same year it installed its first electrolyzer at a Norsk Hydro factory in Notodden.
Back in 2012, the Norwegian government adopted a white paper on climate policy. The most important goal is to reduce CO2 emissions by 30% by 2020, compared to 1990 levels; furthermore, Norway wants to be CO2 neutral by 2050. As part of an international climate agreement, Norway would even be prepared to achieve defacto CO2 neutrality by 2030.
Nel ASA has set the course early on to play a leading role in the growing market for green technologies. Nel's hydrogen solutions cover important parts of the value chain. From hydrogen production technologies to hydrogen refueling stations. These enable the industry to transition to green hydrogen and fuel cell electric vehicles that offer the same fuel supply and range as fossil fuel vehicles today.
Most recently, Nel shares have been struggling a bit with the EUR 2.00 mark; if the breakout here is successful, a rise to EUR 2.70 would be expected. If not, the value should be cautiously stopped out at EUR 1.92 from a technical perspective.
Barsele Minerals - An interesting project in Sweden
Another Scandinavian protagonist in future technology is Sweden. The government has very ambitious climate targets for its own country. Already in March 2009, the government presented its targets for 2020. According to these announcements, the country wanted to be completely independent of fossil fuels by 2020 and reduce its CO2 emissions by 40% compared with the reference year 1990.
Sweden will most likely achieve the Kyoto target for 2022, but the move away from fossil energy is still a long time coming. Coal currently accounts for only about 5% of Sweden's energy mix, but oil still accounts for 30%. By comparison, coal accounts for 24.5% of Germany's energy mix, while oil accounts for a high 36.4%. Of course, Germany has disproportionately fewer natural energy sources. Overall, Sweden's energy and climate policy is nevertheless ambivalent: By 2025, Sweden wants to generate about half of its energy with wind power and other renewables, yet nuclear power currently covers about 43% of its electricity needs.
A still small resource company is Barsele Minerals, based in Canada, with an interesting Swedish project. It is located in the mining region of Västerbottens Län in northern Sweden, 600 km north of Stockholm, and covers 33,500 hectares in the Fennoscandian Peninsula. The Barsele project is located at the western end of the Proterozoic "Skellefte Trend," a prolific belt of volcanogenic massive sulfide deposits that overlaps with the "Gold Line" in northern Sweden. Both polymetallic deposits and intrusive-hosted gold intercepts are present in this region. Gold is generally associated with arsenopyrite and low base metal content but also occurs as a native metal.
A few months ago, the Canadians were virtually a pure holding company and thus little known among raw material specialists. Barsele previously had a 45% stake in the Barsele Project in northern Sweden. In May, they published a letter of intent that they had concluded with Agnico Eagle. According to this, Barsele Minerals will completely take over the eponymous gold project and acquire Agnico Eagle's 55% share. The Barsele management now wants to cast the LOI with Agnico Eagle into a binding contract and move the project forward. The team around CEO Gary Cope has already announced concrete goals. They want to drill at least 30,000 meters in the first 18 months to expand the existing resource. The overall target is a resource definition of 3.5 million ounces of gold.
Barsele shares have already gained 50% in June, rising from CAD 0.50 to CAD 0.75. The reason is the newly started drilling work together with Agnico-Eagle at the site. As this is a historic mining area, good drilling results will lead to further share price increases.
Nordex - Huge capital increase spooks investors
Wind turbine manufacturer Nordex is a German EEG implementer with big ambitions. Now the Company is providing itself with greater financial leeway with a considerable capital increase. Nordex plans to issue a total of nearly 42.7 million new shares for EUR 13.70 each via a rights issue. The whole thing was announced last Wednesday evening and sent the share price down 17% on a weekly basis.
Major shareholder Acciona and the investment Company SKion want to fully exercise their subscription rights, according to the Company. The capital increase is to consist of a gross cash component of EUR 388 million and a contribution in kind from Acciona of around EUR 197 million, which will be used to contribute loan receivables against the Company.
Just at the end of June, Nordex stock had achieved a nice chart-technical buy signal and then came the steam hammer for the tender seedling of the upward movement. The Company's surprising decision to announce a major capital increase at the very time of a chart breakout does not indicate that it trusts its price movement. The equally surprisingly low subscription price of EUR 13.70 and the redemption of a significant shareholder loan paint a rather disturbing picture.
We had recently already warned against the share after the poor Q1 figures. Finding the right climate stocks is a feat because either they are analytically overvalued, already hyped several times, or just not that well known yet. Nordex has been listed since 2001 and runs up and down in nice cycles. In times of declining margins, the stock is probably more of a sell candidate. We remain skeptical!