27. May 2021 | 07:25 CET
Nevada Copper, Salzgitter, NIO: The Greens and the Copper Price
Since the end of March 2020, the copper price has doubled. The trend is intact and investors are using every minor interim correction to get in. After the pandemic, countries worldwide want to get their economies back on track and fit for the future. Investments in infrastructure have been overdue for years anyway and are the very first measure for many countries. Sustainable solutions, such as charging infrastructure for electromobility, are also on the agenda. The copper price should continue to benefit. Demand from Germany, in particular, is likely to increase - a look at the polls in the election year suggests that it should soon rain billions for electric cars and their charging infrastructure. Some stocks are already benefiting.
time to read: 3 minutes by Nico Popp
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Nevada Copper: A copper producer with aces up its sleeve
The Canadian Company Nevada Copper has a promising mining project in the US state of Nevada. The underground mine is already partly in production and will be further expanded. This summer, Nevada Copper is set to get going. The Pumpkin Hollow mine is expected to produce 77 million pounds of copper per year. The open pit mine not far from the underground project could even produce 200 million pounds of copper. In addition, there are 4 other properties where Nevada Copper is pushing ahead with exploration.
In particular, the planned open pit mine, which has already been approved, offers Nevada Copper great potential. 5 billion pounds of copper are expected there, with the rock having high grades of up to 0.69% copper equivalent. According to the Company, the open pit mine alone could stand for an annual EBITDA of USD 239 million - and that at a copper price of only USD 3.20. Currently, the industrial metal is trading around USD 4.50 after an interim correction. In the past, Nevada Copper's share price often suffered from the Company's oppressive debt mountain and the large number of shares issued. With production now starting up, this market skepticism should gradually dissipate.
Due to the exploration potential and the already approved open pit mine, which is sustainably designed and meets ESG standards, Nevada Copper offers everything it needs for a positive share price development. The share price has fought its way free in 2021 and is currently consolidating. Those who believe in copper can take a closer look at the value.
Salzgitter: Tradition with potential
When it comes to industrial metals, German investors, in particular, are quick to think of Salzgitter. The Company from the city of the same name also posted a negative result in 2020. Above all, the pandemic affected Salzgitter. Thanks to rising orders in the summer, however, the steel group got off lightly. Salzgitter sees itself as a steel technology group and stands for flat steel, beams, plate and tubes. Particularly because of the economic recovery, the further course of business is likely to be positive.
Despite this, the share price did not develop to the shareholders' liking in the past three months, with the share falling by 1.6%. On a one-year horizon, however, the price gain of 123% is significant. In the long-term chart, the share could encounter resistance beyond the EUR 30 mark. After that, however, additional price potential could arise. Salzgitter is a solid share with comeback potential. However, the Company's trees do not grow to the sky.
NIO: Innovator with sand in the gears
The Chinese electric car manufacturer NIO is another potential demand driver for copper. Each electric car contains around three times more copper than conventional combustion engines. In addition, there is copper in the charging infrastructure for electric vehicles. NIO has made a name for itself with stylish models and long running times. The stock was at times as popular as that of Tesla or BYD. Yet, at times, the air was out of the value. Over a period of three months, the share lost 17%. Recently, however, NIO is on the rise again and has gained more than 10% in just five trading days. If the stock gets back on track, there could be potential for speculative investors. However, investors need to keep in mind that NIO has already done very well - in the last 12 months alone, the stock gained a staggering 247%. This development is also due to the China fantasy and the innovative models.
But the competition is catching up! Volkswagen has launched an e-car offensive and Daimler and others are also committed to electromobility. Since German manufacturers are scoring points worldwide with strong brands, it could become more difficult for newcomers such as NIO to grow in the long term. Volkswagen, in particular, is very popular in China. NIO is a stock that gamblers can keep an eye on. Beyond EUR 20, the stock could gain new momentum. Those who want to focus on critical raw materials for electromobility instead of electric cars can take a closer look at Nevada Copper. Raw materials from Western industrialized countries are in demand because more and more e-car buyers are asking questions about the origin of the metals and ESG criteria. Politically, there is also a trend to become less dependent on foreign raw materials.