August 26th, 2022 | 10:57 CEST
Nordex, Alpha Copper, Uniper - Forward-looking change
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Nordex still in the red despite full order books
Nordex (ISIN: DE000A0D6554) is facing difficult times. Although the wind turbine manufacturer is a flagship for renewable energies, the locations in Germany and Europe are conceivably unfavorable for current production. The Nordex Group produces nacelles, rotor blades and concrete towers at sites in Germany, Spain, Brazil, the US and India. The first two locations, in particular, are affected by the horrendous energy costs for electricity and gas, which will continue to rise over the next 24 months.
Even though the order books are full to bursting, the competition in the US is miles ahead of the Company when it comes to supplying energy to the production sites. For example, General Electric is presenting for the first time appropriate technology to feed the wind power generated into corresponding grids - through in-house software technology. In this way, the needs of customers can be better taken into account and adapted to a more digitalized, decentralized and decarbonized energy landscape. At the same time, it can bring reliable electricity to the grid anywhere in the world.
The Hamburgers know how valuable a grid feed can be for the efficient processing of wind power. According to the press release, the Nordex Group has installed its "Xtended Power" upgrade to 52 wind turbines with a total capacity of 135.5 MW at two wind farms in Ireland. As a result, Nordex is increasing the annual energy production of its customer Greencoat Renewable PLC ("GRP") by up to 0.8% - despite severe grid-related production constraints. These power supply challenges remain unresolved in more countries.
Nordex is not making it out of the red at the moment. The Company's sales fell by about one-fifth from January to June due to lower installations and now stand at EUR 2.1 billion, as the Company announced in Hamburg on August 14, 2022.
Alpha Copper expands areas of coveted copper raw material
For wind turbine manufacturers like Nordex, copper is one of the most valuable raw materials for manufacturing new wind turbines. Copper is a highly efficient conductor used globally in renewable energy systems to generate electricity from solar, hydro, thermal and wind power. Copper helps reduce CO₂ emissions and lowers the amount of energy needed to generate electricity.
The price of copper on the world market has risen by an average of 10.3% p.a. over the past 5 years. As a result, a ton of copper costs an average of USD 10. Compared with the price in the previous year, this is an increase of 8%. Raw materials for renewable energies are in demand, as illustrated by the German government's delegation trip to Canada. One candidate for the copper raw material is the Canadian Explorer company Alpha Copper. The Company will acquire a 60% stake in the Indata copper-gold project in northern British Columbia and a 100% stake in the Okeover copper-molybdenum project not far from the coastal community of Powell River in British Columbia. Currently, Alpha Copper is conducting a 5,000 m drill program to explore promising geophysical targets, including carbonate replacement deposits ("CRD") and porphyry copper-gold-molybdenum mineralized environments.
Alpha Copper is also growing through its imminent acquisition of CAVU Energy Metals, another Canadian company dedicated to copper exploration in British Columbia and Yukon. A letter of intent was signed by both parties last week. The merged company will be supported by its strong management team and board of directors to enhance the value of its improved project portfolio. In doing so, it is well capitalized to achieve its goals. Wind power and solar equipment manufacturers are not the only ones who need copper in large quantities. By 2030, 250% more copper will be needed for chargers in electric vehicles.
Uniper: Green by no means - parent company relies on nuclear power
Now, green hydrogen from Canada is supposed to save the financially struggling energy company Uniper. Both E.ON and Uniper concluded a memorandum of understanding with the Canadian company EverWind. The production of green hydrogen in Canada and the transport of green ammonia to Germany affirm the global green hydrogen economy. Uniper CEO Klaus-Dieter Maubach said, "One of Uniper's most important goals is to effectively decarbonize our own and other industries while ensuring security of supply."
Until now, hydrogen has been produced mainly by fossil fuels, resulting in significant CO2 emissions. To avoid these emissions, "green" hydrogen is now being produced. It is obtained by electrolyzers, and the energy required for electrolysis is completely covered by renewable energies. As a result, the production of green hydrogen is CO2-neutral and makes a significant contribution to reducing the burden on our environment. However, this hydrogen has to be transported from Canada to Germany. Until now, this has been done by container ships, which have been powered by heavy oil. How much green is left over is anyone's guess.
Whether Uniper will still be able to operate economically by then is currently being played out at the expense of the German population. Decades of misguided energy policy by previous governments and silence about possible extensions to the operating lives of existing nuclear power plants are leading to a new type of "gas levy" for the population. It is true that only those who use natural gas for heating and production are to pay the gas levy. This results in a volume of EUR 34 billion in Germany. Only two companies, Uniper and Gazprom Germania, account for the bulk of gas supplies from Russia to the EU, with over 90%. According to Reuters information, these are the largest trading partners. Whether this rescue package will be enough for Uniper is uncertain.
Uniper made a net loss of EUR 12.3 billion in the first half of the year. The group is 80% owned by Finnish energy company Fortum. The Finns posted a net loss of EUR 7.4 billion in the second quarter on an operating profit of EUR 574 million, Fortum said Thursday. The Company holds about 80% of Uniper shares. After the planned entry of the German government via a capital increase, Fortum's stake is expected to drop to about 56%. Fun fact on the side for the German energy transition: In 2016, Fortum generated 24.1 TWh nuclear energy. That is one-third of the Company's total electricity generation. Why nuclear power plants in Germany continue to go offline is unclear.
Given the difficulties in the supply chains at Nordex and Uniper, investors should look to early segments of commodity production and supply in these times. Alpha Copper from Canada is a potential portfolio addition for this purpose. Canada's copper mines produced 475.8 t of copper in concentrate in 2020, with more than half coming from British Columbia. Canadian copper exports were worth CAD 7.3 billion in 2020. The proposed transaction between Alpha Copper and Cavu Energy Metals will be completed after due diligence, approval by major shareholders, and shareholder approval. Both Alpha and CAVU expect to enter into a definitive agreement by September 30, 2022.
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