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January 26th, 2023 | 20:00 CET

Nordex, Manuka Resources, American Lithium - The profiteers of scarcity

  • Mining
  • Gold
  • Lithium
  • Commodities
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Besides the raging war in Ukraine, the discussion about the energy industry of the future accompanies us daily. It has already been decided that renewable energies such as wind power and photovoltaics will be the way forward. Likewise, the move away from the internal combustion engine to battery-powered electric motors is in the bag. But the implementation problems will be with us over the next few years. Where will producers get the raw materials that are already in short supply? Another critical issue is energy storage. Here, too, there is an increasing demand for a raw material that is currently produced primarily in Russia and China.

time to read: 5 minutes | Author: Stefan Feulner
ISIN: NORDEX SE O.N. | DE000A0D6554 , Manuka Resources Limited | AU0000090292 , AMERICAN LITHIUM | CA0272592092

Table of contents:

    Nordex - Weak order situation, higher market shares

    The preliminary figures for the full year brought a negative surprise regarding the declining order situation. The total output in the full year 2022 decreased to 6.33 GW, compared to 7.95 GW in the previous year. Even in the solid fourth quarter, the Hamburg-based company recorded 386 wind turbines with a total output of 1.9 GW, significantly less than in the fourth quarter of 2021, when 678 turbines with a total output of 3.3 GW were sold. Only the average sales price of EUR 0.89 per MW increased compared to EUR 0.74 per MW in the same period last year. The wind turbine manufacturer expects final figures on March 28, 2023.

    Despite the downturn in orders, Nordex is the market leader in its home market and supplied almost one-third of Germany's newly connected onshore wind capacity in 2022. Based on the commissioning of onshore wind turbines reported by customers in the market master data register for 2022 in Germany, the Nordex Group occupies the top position among manufacturers, according to data from the Fachagentur Windenergie an Land. According to this, the Nordex Group installed 173 turbines in the Federal Republic in 2022, corresponding to an increase in output of around 170%.

    Overall, the order situation for Nordex SE declined in 2022, but total output in Germany increased by 170%. Source: Nordex SE

    Manuka Resources - Important component of the energy turnaround

    Everyone talks about the scarcity of raw materials for the energy transition. Lithium, cobalt and copper are becoming scarce commodities due to the increasing demand for renewable energies. But many forget the industrial metal vanadium, which is benefiting from the growing demand due to the boom in energy storage systems. The issue here is how to store energy from the sun and wind when it is not needed. While lithium is preferred for electric cars, vanadium is ahead in large-scale applications. With lithium-ion batteries, the energy output is gradually diminishing. Vanadium-based batteries, known as vanadium redox flow batteries, on the other hand, have no expiration date, which creates clear advantages for solar or wind power systems that operate for years. Vanadium has been designated a critical mineral by governments in the US, EU and Australia. According to Manuka Resources CEO Dennis Karp, demand is expected to grow tremendously, doubling by 2026. To date, China and Russia are the largest vanadium producers in the world.

    However, with the South Taranaki Bight project (STB project), Manuka Resources could become the largest producer in the Western world in the future, accounting for 15% of global annual production. A preliminary feasibility study has already been completed for STB, and more than USD 50 million has been invested to date. The project has a granted mining license and an exceptionally large JORC resource of 3.8 billion t. Current projections place it in the lowest cost quartile for iron ore production and the lowest quartile for carbon emissions per ton of ore produced. In addition, the STB concentrate contains a significant vanadium content of 0.5%/t, expressed as vanadium pentoxide. At this grade, and based on initial estimates of annual mining rates for the STB project, the estimated yearly vanadium production would be approximately 55 million pounds.

    In addition to the high-grade mineral deposit, Manuka Resources also has two prospective mining projects in the Cobar Basin with a total exploration zone of 1,150 sq km. With the Mt Bobby gold project, the Australians own one of the continent's historically richest gold mines, which mined 500,000 ounces of gold at an average grade of half an ounce per ton of ore in past production. In 2020, this was put back into production with a target of producing 24,000 ounces of gold, which was exceeded by a factor of 2. Management believes the resource has further significant potential at depth.

    The Wonawinta Silver Project is Manuka Resources' second precious metals project. With a mineral resource estimate of 51 million ounces, the property is one of Australia's largest silver producers. In addition, 200,000t of lead in place has been estimated. Another asset is the processing plant available at the deposit, which can treat both precious metals. The project is currently in production and is processing the 515,000t stockpile located on the ROM pad adjacent to the plant. Currently, production is dormant, but should the base price increase, it is expected to be activated quickly.

    Thus, on the one hand, Manuka Resources has considerable upside potential due to the rising gold and silver prices. On the other hand, the Company could transform into a leading player in the green energy industry. The market capitalization is currently CAD 44.36 million.

    American Lithium - Leading in the shortage economy

    By 2030, some 15 million electric vehicles will be on the roads in Germany alone. The problem here is that this is difficult to impossible to implement. There is simply a need for more lithium, a raw material vital for batteries. According to estimates, demand is growing to more than 550,000t per year. Of this, demand from the battery industry accounts for around 90%. As reported by "Handelsblatt," according to experts at the German Federal Institute for Geosciences and Natural Resources (BGR), there will then be a shortage of 300,000t of lithium per year in 2030 in the worst case. In the best case, still 90,000t.

    The beneficiaries of this severe supply shortage are the lithium producers, especially those from the Western Hemisphere. One of the best-known players in the lithium market is American Lithium, based in Vancouver, Canada. The company owns the TLC Claystones lithium deposit in the US, located close to the Tesla gigafactory in Nevada. Following the acquisition of Plateau Energy Metals, American Lithium is moving forward with the development of the large Falchani hard rock lithium deposit and one of Latin America's most prolific uranium deposits, Macusani, both located in southeastern Peru.

    Now, American Lithium announced that it has entered into an agreement with Nevada Alaska Mining Co. Inc. to buy back the remaining 1% royalty on the Company's TLC Lithium Project ("TLC") in the Esmerelda lithium district northwest of Tonopah, Nevada.

    Simon Clarke, CEO of American Lithium, stated, "We are very pleased to have reached an agreement with the royalty holder to buy back this valuable royalty, which also ensures that the Company will control 100% of all concessions comprising TLC. As TLC moves through development and into production, this transaction should be highly accretive and will maximize Project value. Removing this remaining royalty also enables us to present TLC as wholly unencumbered in our maiden PEA which is expected to be released in the next few days."

    The need for critical metals for the energy transition is enormous. American Lithium increased the value of its property with the royalty buyback. Manuka Resources is benefiting from rising precious metal prices and is also a leading player in the green energy industry. Nordex was able to expand its market share in Germany.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author

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