October 19th, 2021 | 12:46 CEST
Nvidia, Almonty Industries, BP - Scarcity drives prices!
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"[...] While tungsten has always played an important role in the chip industry, it is now being added to batteries for e-cars. [...]" Lewis Black, CEO, Almonty Industries
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
Almonty Industries - The way is clear
CEO of Almonty Industries, Lewis Black, stated his Company's intention on record at the IIF Forum held last week, "This project is being built to our ESG (Environmental, Social and Governance) program and is therefore designed for a "100-year event" rather than the usual 30 years."
The development of the road and river diversion project continues at the Sangdong Mine site in South Korea. The mine hosts one of the most considerable tungsten resources globally and has the potential to produce 50% of the world's tungsten supply outside of China. Canadian mining Company Almonty Industries, through its wholly-owned subsidiary Woulfe Mining Corp, owns a 100% interest in the Almonty Korea Tungsten project, located 187 km southeast of Seoul.
A capital increase of EUR 9.4 million completed the last condition precedent for the execution of the project. KfW-IPEX Bank from Frankfurt provided the share of the debt capital with a sum of around EUR 65 million. The Austrian Plansee Group was also secured as a new major shareholder and buyer for the tungsten concentrates, which will be produced in Sangdong from 2022. The offtake agreement has a term of 15 years and guarantees Almonty an attractive minimum price for a sales volume of at least CAD 750 million.
Alongside the Plansee Group, Deutsche Rohstoff AG benefits from a steadily rising share price with a 12.2% stake in the Company. The stock market value of the Canadians is currently a manageable CAD 172 million. The Sangdong project will make Almonty one of the world's leading tungsten producers. In addition, there is further potential in important tungsten-producing regions: the Los Santos Mine and the Valtreixel project in Spain and the Panasqueira Mine in Portugal are also part of the mining company's portfolio.
Nvidia - Main beneficiary of the chip shortage
The shortage of semiconductors is affecting the automotive industry worldwide. There are several reasons for this. One is the structural change that is currently taking place in the automotive industry. The demand for cars based on electric drives is increasing significantly compared to vehicles with combustion engines. In addition, due to the Corona pandemic, there has been a disruption in supply chains. Already in the first half of 2021, 4 million fewer cars had been built than planned. Accordingly, Volkswagen was 21%, Ford 18% and General Motors 12% below plan.
But the shortage of semiconductors is also present in other industries. End customers felt this most recently in the sharp rise in prices for graphics cards from industry leader Nvidia. The average sales price compared to the RRP is currently a proud 172%, and a flattening of the price curve is not expected until the summer of 2022 at the earliest.
There are also delays at Nvidia when it comes to the final takeover of the British Arm Group. More than a year ago, the offer was sent to Japanese tech investor SoftBank for USD 54 billion. Although the US chip giant is offering concessions, the EU competition regulators want to examine the merger in more depth. The European Commission is expected to conclude its preliminary review on Oct. 27. A four-month investigation into the deal would now follow, people familiar with the matter told Reuters news agency. In terms of market leadership, Nvidia should continue to benefit from the chip shortage, but a cancellation of the ARM deal could impact its share price, at least in the short term.
BP - Profits in the "old" business
Oil and gas giant BP has set a goal of being a carbon-neutral company by 2050 or sooner and helping the world become carbon neutral. The focus is on renewable energy and electromobility. With the investment in Digital Charging Solutions GmbH, in which the carmakers BMW and Daimler each hold a one-third stake in addition to BP, the Company intends to invest in infrastructure concerning e-charging stations. Behind the partner company is the charging station provider Charge Now, which has already announced its vision of expanding the global network of public charging points for e-vehicles to at least 70,000 by 2030.
For now, however, BP is still making good money from soaring oil and natural gas prices. As a result, private bank Berenberg has upgraded the group from "hold" to "buy" and raised its price target from 310 to 425 pence. Valuations in the oil and gas sector remain attractive and, given the favorable business environment, consensus estimates are likely to rise further, analysts commented.
Scarcity is the prevailing theme of our time. Tungsten producer Almonty Industries has a unique selling point due to the construction of the world's largest tungsten mine. As an industry leader, Nvidia continues to benefit from the chip shortage, and the tight supply in the oil sector should be positive for BP, according to analysts.
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