April 28th, 2022 | 11:59 CEST
Never invest like Elon Musk! Twitter, Phoenix Copper, BYD
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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
Twitter: The reading is not over yet
Elon Musk is acquiring Twitter, putting more than USD 45 billion on the table. The question of whether the takeover is positive or negative has been discussed in recent days. But not whether the share can still be of interest to private investors from now on. On the surface, the matter is clear: the price per share is established globally, and it seems to be cemented in this range. Further, it is hard to imagine Twitter attracting a white knight to make an even higher bid.
Still, it might be worth keeping an eye on the Twitter share in the coming months. Musk's acquisition seems to be knitted with a hot needle. Only weeks ago, the wealthiest person in the world joined the short message service, and now the big sweeping blow. Musk wants to make the service a place of free and independent information and even disclose Twitter's algorithm. Coupled with Musk's Starlink satellites for Internet almost anywhere on Earth, the project could be promising. The upcoming negotiations are also likely to get the stock price churning every now and then. The takeover is not yet complete.
Phoenix Copper: Feasibility study ahead, production starting in 2023
That Elon Musk has the means to commit to higher goals, such as global freedom of expression, is the result of his success. Even though the serial founder and visionary has staying power until investments pay off, Musk probably would have been better off investing in Canadian commodity developer Phoenix Copper. The Company is currently working to bring its Empire Open Pit project in the US state of Idaho into production. The property stands to yield copper, gold and silver and could be producing as early as 2023. Domestic raw material deposits are gaining in importance in the US. While people in Europe are discussing and trying to find the best possible way forward without knowing what it will look like, in the USA, they are making decisions and promoting the self-sufficiency of domestic industry. Since many projects in the US are also designed to be environmentally friendly, raw materials from there are also becoming attractive for international supply chains. Companies like Tesla and many classic car manufacturers are hungry for sustainably mined raw materials.
Phoenix Copper plans to use the heap leaching process at its Empire project, in which an acidic solution dissolves metals from the rock, which can then be pumped to the surface. Thanks to the geology on site, no acid is to be released into the groundwater. Currently, the Company is going through key permitting processes and working on a feasibility study. In addition to the Empire Open Pit, Phoenix Copper offers projects around cobalt and gold. There are already cooperation agreements in place and plans to list the gold activities separately on the stock exchange before the end of the year. The share is not yet on the market's radar. The planned feasibility study could provide information about the prospects, which some observers already describe as promising.
BYD: Long-term risks loom
So far, the Chinese automaker and battery specialist BYD has been largely unaffected by disrupted supply chains. The Company is emblematic of the Chinese raw materials strategy based on the principle "it is better to have than to need". China has been proceeding in this way for decades, thus securing the basis for the upswing of its own industry. But in the meantime, the market for automotive batteries is also becoming more transparent: The EU plans to make supply chains transparent throughout. Cobalt from problematic mines would then be penalized. That could erode some of BYD's relative advantage. The stock has recently freed itself, but a directional decision has not yet been made.
While Twitter is currently in focus only because of Elon Musk's hobby, other companies offer more solid reasons for rising share prices. Commodities are scarce, and the supply in the future must urgently stand on several pillars. Budding producers from North America, such as Phoenix Copper, could offer long-term prospects. However, investors must pay attention to risk management. The dominance of companies from China could break as soon as ESG criteria play a role along the entire value chain in e-mobility and renewable energies.
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