Penny stocks with multiplier potential: Volkswagen, CATL, Pasinex Resources

Zinc as a base and high-tech metal

More than half of the zinc mined globally is used to make steel corrosion-resistant. Stainless steel is mainly needed by the automotive industry. And since car bodies are still necessary in the age of electric vehicles, this demand is unlikely to wane. On the contrary: Zinc-based batteries, such as zinc-ion or zinc-air batteries, could achieve a market share of up to 20% by 2030. Today, their market share is only around 5%. Demand for zinc from the automotive industry is therefore likely to increase even further. However, the supply structure for zinc could be problematic. Currently, around one-third of the zinc mined worldwide comes from China. This is raising concerns about potential disruptions to the supply chain. The EU and the US have therefore already added zinc to their list of critical raw materials. Against this backdrop, there is growing pressure to establish stable supply chains and alternative sources of supply.

Volkswagen and CATL: Nothing works without zinc

Car manufacturer Volkswagen set itself the goal years ago to diversify its supply of raw materials and, VW Chief Technology Officer Thomas Schmall even mentioned direct participation in raw material projects as a possible option. Volkswagen has already signed supply agreements with partners in Canada and is also planning joint ventures to secure access to critical raw materials.

While zinc is primarily used at Volkswagen in car bodies and die-cast parts like locks, zinc is considered a technology metal for CATL. The Chinese company CATL is a global leader in the manufacture of lithium-ion batteries and supplies numerous automakers, including Tesla, BMW, and Volkswagen in China. CATL benefits from home advantages: China controls large parts of the global battery value chain – from raw materials like lithium, graphite, nickel, and zinc to refining and cell production. This enables CATL to produce at a low cost. However, geopolitical rivalries and the tariff conflict are prompting Western companies to diversify their supply chain. In addition, there are still environmental concerns surrounding some Chinese products.

Pasinex Resources: Small projects + high grades = Substantial returns

For these reasons, zinc companies such as Pasinex are increasingly becoming the focus of industry. The Canadian zinc producer pursues a unique business model that reduces costs and is also flexible. Instead of focusing on mass production, Pasinex concentrates on extremely high-grade zinc deposits and small mines with short development times. In Turkey, Pasinex holds a 50% stake in the Pinargozu zinc mine, which offers exceptionally high zinc grades of 25–50%. By comparison, the industry average is often in the single digits. This "quality over quantity model" also pays off economically: Even with relatively low production volumes, Pasinex achieves high margins of between 30 and 50%, as zinc ore with a grade of 50% per tonne contains around USD 1,300 in metal value, while mining costs remain constant at USD 200 to 300. In addition, this high-grade product can be sold almost directly – no costly refining is necessary.

Pasinex has been operating this model for years and has already sold zinc with a total value of more than EUR 180 million. In addition to the Pinargozu mine, Pasinex Resources has other projects: The Sarikaya deposit already has explored zones with 30 to 50% zinc and is expected to go into operation shortly. With Akkaya, a third Turkish project is in the starting blocks. In the US state of Nevada, Pasinex holds a majority option on the Gunman project, thereby responding to the trend towards greater independence from raw material imports in the US. The business model of Pasinex Resources is therefore perfectly suited to the current climate, with supply chains diversifying and rapid solutions in demand. With its focus on smaller projects with high zinc grades, Pasinex Resources can respond more quickly to the demands of industry. The projects in Turkey and the US are also located in jurisdictions with high legal certainty and proximity to potential customers.**

Zinc project nearing production start – Is Pasinex set for a windfall?

The share price performance of Pasinex Resources reflects the global desire for diversified supply chains, including for base metals – the value climbed by more than 100% within a year. Nevertheless, the market capitalization is manageable at less than CAD 10 million. As Pasinex plans to bring the Sarikaya project into production in the near future, which should generate revenue directly, the share has potential. Outstanding receivables from a Turkish joint venture partner amounting to USD 37.7 million also hold up the potential for a price surge – if the capital flows, this could provide a breakthrough. Pasinex Resources is a stock that investors should keep an eye on due to its business model and other conditions.