December 21st, 2021 | 13:24 CET
Standard Lithium, Altech Advanced Materials, BASF - The super battery for 2022!
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
BASF - The standard name among chemists
Badische Anilin- & Soda-Fabrik, or BASF for short, has historically been a primary supplier of industrial chemical substances. The Company originated in Mannheim in 1865, and its headquarters are in Ludwigshafen. BASF employs more than 110,000 people worldwide and operates at 390 production sites. With sales estimated at EUR 77 billion in 2021, BASF is the world's largest chemical company by sales.
Especially in the context of sustainably produced industrial goods, BASF's precursors are of great importance. Within battery technology, the Company aims to offer all building blocks a positive sustainability balance from 2022 onwards with its production plants for cathode materials in Scandinavia and Brandenburg. Today, OEMs, in particular, have to operate sustainably by carefully selecting their suppliers. Overall, of course, this should also reduce the Company's own CO2 footprint.
The Ludwigshafen company has taken a significant step toward climate protection in its energy supply. The chemicals group has signed up the French Company Engie SA as a long-term supplier of renewable electricity. Something similar is happening in the oil and gas sector, where BASF subsidiary Wintershall has become involved in the Greensand project. Together with partners such as INEOS Oil and Gas Denmark, the aim is to capture CO2 that has been produced and store it underground. However, this has also met with criticism from local officials, who want to rule out all possible dangers to the UNESCO World Heritage Site "Schleswig-Holstein Wadden Sea".
BASF shares are not currently on investors' buy lists. On an annual basis, the share is now losing 8%. At EUR 58.9, the price is also close to an important support around EUR 57. The chart does not look good at the moment, but at least there is a small consolation for long-term investors with a 5.7% dividend yield.
Altech Advanced Materials - The gamechanger in battery production
We have found a new battery stock in Altech Advanced Materials AG (AAM for short) on the German price list since mid-2020. The Heidelberg-based Company is a Frankfurt-listed investment company in technological solutions for electricity storage, especially in the area of e-mobility. Its research efforts aim to improve cathode properties to increase power density, operational reliability and extend service life.
Of course, AAM knows that it is not alone in the market with this objective. Giants such as Tesla, CATL, Panasonic and Samsung have been working for years on optimizing lithium-ion cells. Developments to improve the performance of batteries for electric drives have been in full swing for years now. No matter how small, every Company can contribute to setting the course of an entire industry with its particular technology. The clear goal is to reduce the cost per kWh output to below USD 100, the benchmark.
The technology specialists attach particular importance to the battery materials silicon and high-purity aluminum oxide. To develop its ideas to market maturity, AAM has taken a 25% stake in Altech Industries Germany (AIG) from Dresden. The other 75% is held by the Australian partner Altech Chemicals Ltd. The subsidiary AIG plans to build a factory for the production of coating material for anodes starting in 2022, and the necessary economic feasibility study will be completed by Q1-2022.
AIG holds the exclusive rights for using a new coating technology for anode materials and the rights to the high purity alumina ("HPA") production technology within the European Union from Altech Australia Pty Ltd Australia. Major shareholders and the largest financial stakeholder in AAM are Deutsche Balaton AG and Altech Chemicals Ltd, with a combined stake of almost 70%. The strategic setup is promising.
The AAM share is still relatively unknown and is quoted at just under one euro in Frankfurt. With 5.65 million shares outstanding, the valuation is still very manageable. Thus, a positive feasibility study in the first quarter of 2022 could hit like a bomb.
Standard Lithium - A major correction is underway after all
As we suspected in recent posts, the lithium sector is facing a correction in the short term. To be sure, the price of the white metal is rising faster than it has in years. For example, the Benchmark Mineral Intelligence research firm's lithium price index doubled between May and November and is already up about 240% this year. However, many lithium projects worldwide are still far from being finalized.
The top dogs among producers are SQM, Albemarle and China's Ganfeng. They can meet much of the current additional demand by expanding their mining sites and are earning handsomely as a result. The exploding prices stem more from a psychologically induced shortage situation of many technology producers, who want to absorb the production restrictions of lithium due to the Corona pandemic with long-term hedging transactions. This artificial excess demand is likely to run up to a certain point, and then the pendulum will swing in a completely different direction in the short term.
If the market corrects more sharply, second-tier stocks, in particular, are likely to fall, as they cannot yet deliver at the current high prices. The prices of many lithium hopefuls have already retreated sharply. Standard Lithium is still up more than 300% on an annual basis, but that was also once 500%. Here, remaining profits should be realized at the end of the year, because after all, the explorer is still valued at USD 1.35 billion at the current level.
The hype topics of e-mobility and climate protection drive the protagonists in the share price to ever new heights. However, an expected round of profit-taking is underway, which may still accelerate. Altech Advanced Materials, which is still a small company, could become an important battery player as early as 2022; entry is still possible at a valuation of around EUR 5 million.
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