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July 21st, 2021 | 12:49 CEST

QMines, Varta, Siemens Energy - Who benefits from the copper shortage?

  • Copper
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The copper price has moved significantly upwards over the past year. On the one hand, this is due to the increasing demand caused by sustainability topics such as renewable energies, e-mobility and global electrification. On the other hand, the metal has become scarce. Whereas 60 profitable copper projects were launched in 2008, only 36 were established in 2020, and this with declining mining values. In 2015 0.65% copper per ton was still being mined; this value will fall to 0.55% by 2025. Existing large copper mines will also need billions in the coming years to maintain their production levels. These additional costs will be passed on to consumers. Today we highlight three companies that either produce or need copper.

time to read: 4 minutes | Author: Armin Schulz
ISIN: QMines | AU0000141533 , VARTA AG O.N. | DE000A0TGJ55 , SIEMENS ENERGY AG NA O.N. | DE000ENER6Y0

Table of contents:

    Ryan McDermott, CEO, Phoenix Copper
    "[...] If we pursue our goals conscientiously, the market will adjust its valuation accordingly, I am sure. Often, all it takes is a trigger. [...]" Ryan McDermott, CEO, Phoenix Copper

    Full interview


    QMines - Good news on the Mount Chalmers project

    On July 12, shares of copper and gold explorer QMines were suspended from trading. On July 13, the Company released excellent results from diamond drilling at the historic Mount Chalmers project area. Drilling has shown that the site contains more than copper, gold and silver. Up to 16.8% zinc and 8.3% lead were also discovered. A total of 11 diamond drill holes were drilled with a total length of 1,587m. Peak values were 5.21% copper, 9.31 grams per tonne (g/t) gold and 23 g/t silver.

    The results topped the copper and gold values announced in May. With the new discovery of zinc and lead, the resource model needs to be updated. At the same time, 6 holes of the reverse circulation (RC) drilling program have already been completed. A total of 30 holes are planned with a total drill length of 30,000m. When the results of this drilling program are available, the Company intends to issue a resource update. Like many other commodities, the tin price, in particular, has increased significantly over the past year.

    In addition to the main Mt. Chalmers project, the Company has three other projects in Queensland, Australia. The Silverwood project is located in the same area as the Mount Morgan gold mine. There was historic mining there, just as at the Warroo Project, which hosted a historic copper and gold mine. The Herries Range project area is 330km² and is prospective for gold deposits.

    After the drill results in May, the share price increased by 60%. After the latest update, the share price is surprisingly cautious. With the AUD 11.5 million raised, the Company has enough capital to explore the projects to expand the resources. By expanding the resource portfolio in the main project area, the Company now offers even more potential. Interested investors should buy by limit.

    Varta - Waiting for the numbers

    It takes about 22kg of copper to build an e-car battery that weighs 400kg. Varta has developed the V4Drive, a lithium-ion round cell that can be charged within 6 minutes and still have plenty of power. It is one of the reasons why the partnership with Porsche could be closed. Rumors are that a surprise might be waiting at the Mercedes Strategy Update on the topic of "electric drive" on July 22. The fact is that Daimler does not yet have a partner in the battery sector.

    A new lithium-ion cell factory was opened in Nördlingen at the end of June. The expansion increased the production area by 15,000sqm to a total of 60,000sqm. The infrastructure for further corporate growth was thus created. Otherwise, the news situation at Varta is relatively thin. Market observers expect that the forecast for the current year will be increased. The next figures are announced on August 13. Sales are expected to increase by about EUR 70 million to EUR 940 million, and EBITDA is expected to grow by about 30%.

    Apart from the breakout at the end of January, the share has moved sideways since September last year. The share price has always stopped at EUR 139, even though the Company is developing positively. No sooner does the breakout seem to have succeeded than the share is pushed back below the mark. The weakening DAX certainly played its part in this recently. The fantasy, which is certainly justified around the Varta share, has not yet been priced in.

    Siemens Energy - Wind power disaster

    Siemens Energy's (SE) Spanish wind power subsidiary Siemens Gamesa is posting losses, forcing management to issue a profit warning. Last Thursday, the stock fell by over 10%. The Group initially wanted to achieve EBITDA between 3% and 5%. The Company only intends to maintain its sales growth forecast.

    Gamesa's projects are suffering from rising raw material prices for copper and steel, in addition to operational difficulties. It is not the first time that the Group's great hope has experienced problems with its projects. The subsidiary has not hedged against rising raw material prices, and talks with customers about price increases are inherently tricky.

    Chart-wise, the share has broken all supports so that a test of the low from the end of October at EUR 18.38 is entirely possible. Whether a dividend can still be paid is questionable. Since the profit warning, some analysts have also revised their estimates downward. On the positive side, the order books are full. It is just a matter of learning from past mistakes.

    Producers or owners of copper, like QMines, are long-term winners of the raw material shortage. The market will continue to be fueled by more and more consumption in electrification. Varta also needs copper but will likely be able to pass prices on to customers thanks to innovation in their batteries. At Siemens Energy, projects should be insured against rising commodity prices, but many wind power manufacturers are still struggling to leap into profitability.

    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 in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.

    Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.

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    Der Autor

    Armin Schulz

    Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

    About the author

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