23. March 2021 | 13:23 CET
Nevada Copper, BYD, Varta: Revaluation in copper?
Incredible, what speed! A few months ago, the German automotive industry was still sleepy and hardly reacted to Tesla's announcements to put the mobility of the future on a new footing. Then, last week, Volkswagen ignited the electric flock, and then yesterday came the announcement of the truck-electro cooperation from Traton Group, consisting of VW, Scania and MAN. They are to invest EUR 1.6 billion in the research and development of e-trucks by 2025. Daimler-Benz and Volvo had recently talked about a hydrogen powertrain. VW gained 7% yesterday and Daimler barely moved from the spot. So the capital market pendulum is seemingly swinging back in the direction of electromobility.
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ISIN: CA64128F1099 , CNE100000296 , DE000A0TGJ55
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
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.
Nevada Copper - Final preparations underway
On days like these, one can find peak prices for the raw material copper. Yesterday the price per ton was around USD 9,072, about 6% below the 10-year high. The direct impact on copper prices is the acute shortage caused by the run in the e-mobility sector, as no new large copper projects have been launched in recent years. Most copper is now mined in South America and China, with new projects in Mexico, Nevada and Canada. However, these new projects are not expected to start for 2-3 years at the earliest.
Meanwhile, good news for the copper market comes from a new producer in the USA, Nevada Copper Corp., with its Pumpkin Hollow underground project. The conveyor system for the new shaft has now been put into operation in March. 5,000 tons of material can now be extracted from the depths. New ventilation systems and an increased power supply are currently still being installed, as the new large-scale plant requires more significant investment in materials and safety. If everything goes according to plan, the mine will be able to fully ramp up and deliver the sought-after copper concentrates as early as the third quarter of 2021.
The underground mine's annual production will average about 77 million pounds over the production years, and the open-pit mine could then produce about an additional 200 million pounds once approved. Naturally, there is also gold and silver to be found as accompanying products. These are always supplied in the gold state of Nevada. Nevada Copper is thus one of the next projects to "come online." Since the beginning is already within reach, the capital markets will get involved in the share with a lead-time. Currently, NCU shares are bought at around CAD 0.18 at the start of a major revaluation.
BYD - More orders from the UK
Good news again from Build Your Dreams (BYD). The Chinese technology Company, which works with partner ADL in the UK, has received another order for e-buses. BYD is financially backed by major investors such as Warren Buffett and his megafund, Berkshire Hathaway, and is on the cutting edge with its bus offering.
Especially in the crowded mega-metropolises of Asia and Europe, the zero-emission buses make sense because they solve the particulate matter problem, at least in part, since the largest source of the particulate matter remains, of course, rubber tires. But at least the diesel has already been banned from public areas of the city.
The new double-deckers are to be used on park & ride services in West Yorkshire. The BYD-ADL partnership in the UK was launched in 2015 and is going quite well as a European-Chinese project. In total, more than 750 electric buses have been ordered in just under 6 years. ADL is a subsidiary of bus manufacturer NFI Group Inc. (NFI).
BYD shares suffered a bit in the wake of the Tesla correction and are currently trading at just under EUR 20, down about 35% from their January high. Any further weakness of the NASDAQ and the 50% correction level at EUR 15 could still be approached. We therefore remain outside the BYD share.
Varta - Grandiose comeback
As we suspected, Varta's commitment to the automotive battery came earlier than expected. No sooner had the share struggled with a major sell-off than management announced a change in car batteries strategy. According to information from WirtschaftsWoche, new types of cells are already to be produced in a pilot line at the Company's headquarters in Ellwangen. This statement gave the Varta share a valuation premium of EUR 1.5 billion in just 48 hours. This is how dreams are made.
The word from Ellwangen was that the new battery could be used primarily in vehicles in the premium segment. Varta CEO Herbert Schein announced: "The developments of the new lithium-ion cells are going extremely well. The results exceed our previous expectations". Varta plans to announce details at a later date. There is no limit to the imagination; this is the kind of information a bullish stock market wants.
Varta has so far mainly produced small lithium-ion button cells for wireless headphones and conventional household batteries, i.e. consumer products without any real technological brilliance. Group sales climbed by around 140% to EUR 870 million in 2020, thanks in part to the acquisition of the household batteries business. While sales are expected to rise to about EUR 1 billion in 2021, net profit is estimated to remain relatively low at EUR 165 million. Without the car battery kicker, the stock remains boring - let us see to which price levels investors will now exploit the new story; the high was EUR 180 in January. We are curious.