December 13th, 2023 | 06:40 CET
Rock Tech Lithium, Klimat X Developments, Plug Power - Which GreenTechs have potential?
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"[...] We can convert buses and trucks to be completely climate neutral. In doing so, we take a modular and incremental approach. That means we can work with all current vehicle types and respond to new technology and innovation [...]" Dirk Graszt, CEO, Clean Logistics SE
Rock Tech Lithium - Lithium supply secured for Guben
Rock Tech Lithium is a clean tech company that wants to produce high-quality lithium hydroxide for the electric mobility revolution with the aim of supplying the automotive industry and reducing emissions. The Company is investing in its own mineral project in Canada and plans further processing in its first converter in Germany to create a closed loop economy for lithium. While an offtake agreement for the refined lithium has already been signed with Mercedes-Benz, there are still two important points that Rock Tech Lithium needs to work through.
Point 1 has been completed since December 4 - a binding offer for at least 250,000 tons of spodumene concentrate over 5 years has been received from Castelburg Industrie GmbH. There is also the possibility of increasing the purchase quantity and delivery period. This secures the supply of raw materials for the converter in Guben. This should also have a positive effect on the financing negotiations. The Company has been working on this for around 2 years. To this end, the loan financing from the banks, the strategic equity partner and the subsidies must be reconciled. The process is taking longer than expected due to the newly requested funding of EUR 200 million, as the wheels of bureaucracy grind slowly.
In addition to the lithium hydroxide converter in Guben, planning is already underway for another one in Ontario, Canada. There, 35% of the costs for the plant will be covered by subsidies. Other activities are also being expanded. Together with Imagine, the possibilities of cooperation in northern Ontario are being examined. Rock Tech has signed a letter of intent with Electra to develop a partnership. Electra is to extract lithium in its battery recycling plants, and Rock Tech will then reprocess this material into battery-grade lithium. The share benefitted from the latest news and rose to CAD 1.70. A consolidation then set in. The share is currently trading at CAD 1.36.
Klimat X Developments - Flagship project is developing
The market for carbon credits, often known as CO2 certificates or emission rights, has developed into a global industry based on the urgency to combat climate change. The market is booming as more and more countries and corporations set climate targets and use carbon pricing as a tool to improve their carbon footprint and meet regulatory requirements. This requires companies such as Klimat X Developments, which focuses on the development of projects to reduce carbon emissions. This involves reforesting, restoring and protecting large areas. This makes it possible to generate recurring income for at least 30 years.
The focus is on countries whose areas have a high potential for CO2 credits and favorable land prices. The Company is actively working in Mexico, Suriname and Sierra Leone. Further projects are already being planned. The most advanced project, Sierra Leone 1, designed for 50 years, has a maximum area of 25,000 hectares and can generate up to 500,000 tons of carbon credits per year with an average annual return of 15 to 20%. A Fortune 100 company (customer) has secured 5,000 ha and already made a second partial contribution to financing the reforestation on October 26. So far, 1,400 ha have been planted, and preparations for the next planting phase are underway.
At the end of November, the client visited the site to learn about the project's progress and procedures. There was also a meeting with the communities and landowners. The management team is among the most experienced experts in the field. This is also demonstrated by the presentation given by CEO Dr. James Tansey at an Armchair Trader investor event. The Company was also represented at the UN Climate Change Conference COP28 and used the opportunity to seek new partnerships for climate protection packages. The share has not yet honored the good news. Since peaking at CAD 0.245 in mid-July, the share price has fallen to CAD 0.095. The share is currently trading at CAD 0.11.
Plug Power - Gloomy prospects
At the beginning of 2021, hydrogen was the ultimate hype topic. Share prices soared to unimagined heights. Since then, however, the steady decline has begun. For a long time, Plug Power seemed to be able to escape this trend, but now the Company is struggling with liquidity problems and has issued a warning regarding the continuation of business operations with its latest quarterly figures. Even before this, the Company rarely achieved the high targets set by management.
Now, the industry is also confronted with high financing costs, regulatory risks and uncertainties regarding government support. According to a leaked draft of the US Treasury Department's tax relief rules related to the Biden administration's climate bill, hydrogen production facilities must be powered exclusively by clean energy. This could hinder the commissioning of some plants. In any case, there have already been some delays in the construction of Plug Power plants, but these have nothing to do with the new regulations.
Most recently, there were also difficulties with the hydrogen supply, which the Company intends to resolve by the end of the year. Analysts have long stood by Plug Power, but the façade is slowly crumbling. Morgan Stanley recently downgraded the share and issued a price target of USD 3.00. Previously, it had been USD 3.50. The Company is running out of time, and if you look at the news situation, no new major orders have come in since mid-October. The share has not yet closed the price gap that opened up after the quarterly figures. The share price currently stands at USD 4.09.
Only those with a sustainable business model will be successful in the GreenTech sector in the long term. Rock Tech Lithium covers the complete value chain of lithium and has not forgotten the needlehole of refining. As soon as the financing for the first converter is in place, the share will be revalued. Klimat X Developments works for large corporations and generates CO2 certificates with which its customers can offset their carbon footprint. The business model will become even more important in the future. Hydrogen is also essential to move away from fossil fuels and make surplus energy usable and transportable. Plug Power seems well positioned, but money is running out. Caution is advised here.
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