March 22nd, 2022 | 14:06 CET
Nevada Copper, Mercedes-Benz, BYD - Price increase for copper expected
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"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
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Nevada Copper - Beneficiary of rising copper prices
The copper market has been hitting new highs since the sanctions against Russia. According to S&P Global, Russia is the fifth largest producer of refined copper globally, with about 30% of its exports going to China and the rest to Europe. In the coming months, Jeff Currie, Global Head of Commodities Research at Goldman Sachs, forecasts "significant" upside risk for copper prices, as expressed in an interview with Bloomberg. The "massive deficits" in supply are due to the current international dislocations. Ergo: a lot is being produced, but not everyone can get to it. Local solutions are needed.
Demand for copper comes largely from the construction and automotive sectors. Copper is used in electrical cables and in the sealing of residential and commercial buildings, among other things. Its excellent conductivity makes copper an essential component of electric motors in the automotive industry.
With an ETF specializing in copper, there is a risk of continuing to support war-torn Russia. Also, as an investor, you run the risk of funding copper mines that may not meet ESG standards.
ESG stands for Environment, Social and Governance. For copper producers, that means respect for biodiversity, water management, carbon footprint reduction; for social, it means human rights, land use, worker health and safety. For management, it is legal compliance, ethics, fighting bribery and corruption and transparency.
One ESG-focused investment alternative is Nevada Copper. Based in Canada and mining copper in the US, the Company uses an underground mining facility to mine copper in Nevada, USA. The copper share appears fundamentally undervalued at the moment. Nevada Copper has had to endure pandemic-related delays like all other companies that rely heavily on local employees. With its mine deposits, it is well-positioned to meet the supply of copper on the world market in an ESG-compliant manner. Commodities as an investment diversify the portfolio and lay the foundation for industries based on them.
Mercedes-Benz - New US battery plant secures supply chain
Companies face two choices in their business expansion: either they continue with what they can do and what they know works well. Or they launch breakthrough innovations that, piece by piece, lead to a transformation of their main product. Here, the question is "make or buy." Global players in the automotive sector can maintain their supply chains with their own developments.
For example, Mercedes-Benz is opening a new battery plant in Bibb County, Alabama, US. Just a few months before the start of production of all-electric Mercedes EQ vehicles in the United States. The EQ vehicles are similar in appearance to Mercedes Jeeps. The new battery plant solidifies the US location in the global production network of the Stuttgart-based auto pioneers. Mercedes-Benz will produce the EQS SUV and EQE SUV at its Alabama plant. The move is one component of the Company's global push to produce all-electric vehicles at seven locations on three continents.
While gasoline prices are rising dramatically in Germany and SUVs are being publicly ostracized by an environmentally conscious clientele, in the land of unlimited opportunity, it is comfortable to drive at cruise control on the highways under the star of a German automaker. And in the future, it will be fully electric. All these batteries require copper as the basis of their manufacturing process.
The Mercedes-Benz EQS SUV will go into production soon. Starting in 2023, the battery plant will supply the three-row EQS electric SUV and the smaller two-row Mercedes-Benz EQE SUV. It takes about 33 hours by car from the Nevada copper mine site near the East Coast to the Mercedes-Benz battery plant in Alabama heading west. The advantage: supply chains are virtually unbroken.
BYD Electronic - Joint venture Denza becomes spin-off in luxury car segment
After the price declines in recent days, investors in the Chinese BYD Electronic share are looking forward to the upcoming board meeting, in which the board members will present the 2021 earnings. According to the announcement, they are holding out the prospect of a dividend. The Company is referred to as the Chinese Tesla as it is growing rapidly in the automotive segment of electric vehicles. It also serves segments in consumer electronics and produces smartphone batteries.
Due to political tensions, BYD Electronic is focusing on its in-country resources, similar to Mercedes-Benz, to sustain the Company's growth. These include joint ventures with well-known global players. Zhao Changjiang, head of the sales department of Denza, a joint venture between BYD and Mercedes-Benz Group, released new information about the innovative luxury electric car brand's high-end multi-purpose vehicle on Chinese social media 'Weibo' yesterday.
Last Sunday, Zhao also announced that Denza would appear as a stand-alone brand at the prestigious "Auto China" trade show on April 21, 2022, as the Company develops a new design and redesigns its logo. Denza is a strategic move by BYD Electronics. It is designed to tap into the high-end luxury car market.
Commodities as an investment should not be missing from any portfolio. With a Nevada Copper share, investors are betting on the US market and strengthening the back of companies such as the Mercedes-Benz Group share. The latter is responding to supply chain disruption by opening a battery plant at its US location in Alabama to secure production of the upscale Mercedes-Benz EQ SUVs. These will roll off the production line in the US from 2023 onwards, running on all-electric power. Meanwhile, BYD Electronic investors can look forward to a share dividend soon and can watch with excitement the development in the Chinese luxury car segment, which is served thanks to Denza.
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