11. August 2021 | 11:16 CET
Standard Lithium, Defense Metals, Gazprom - This bottleneck costs real money!
Electromobility is becoming increasingly important for the energy transition in transportation. And with it the research, development and production of batteries, especially in Germany as a high-tech location. In addition to performance, the sustainability of batteries plays a decisive role. In particular, this includes fair and sustainable sourcing of raw materials, a high proportion of renewable energies, and optimal energy efficiency in production. Completing the battery cycle would be intelligent reuse and a closed resource cycle through recycling. Some metals on this earth are extremely scarce and rarely occur in nature. They take on a strategic dimension in the context of climate protection.
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ISIN: STANDARD LITHIUM LTD | CA8536061010 , DEFENSE METALS CORP. | CA2446331035 , GAZPROM ADR SP./2 RL 5L 5 | US3682872078
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.
Standard Lithium - Strategic opportunities are traded here
The mere possession of rare or strategic metals has become a significant value indicator for property valuation. If it is possible to obtain the appropriate permits and financing commitments for a resource, there is almost nothing standing in the way of mine construction. A new player in the critical metals market focusing on lithium is Canada's Standard Lithium Ltd - one of the best industry performers of the last 6 months.
The Company's flagship Smackover project is located in southern Arkansas. It is engaged in testing and proving the commercial viability of lithium extraction from over 600,000 acres of permitted brine operations. The Company is working on its first proof-of-concept, an industrial-scale direct lithium extraction demonstration plant, which recently began operations at Lanxess' South Plant in southern Arkansas. The plant uses the Company's proprietary LiSTR technology alongside bromine recovery to selectively extract lithium from Lanxess brine. This process does not evaporate water to extract lithium; instead, it relies on brine flow from the brines.
Recently, ex-BASF manager Dr. Volker Berl was brought on board. He will support the development of the Company with chemical expertise. He already has a history and corresponding experience with institutional capital markets and has his own track record of investing in technology companies. With the huge jumps in the share price in recent weeks, the stock market is obviously betting on a close M&A deal, as Standard would be grossly overpriced in any case, given the state of expansion of lithium production.
Defense Metals - A new deal with Sinosteel for Wicheeda
The supply of scarce and especially rare raw materials could become a burden for industrial recovery after the pandemic. The further increasing dependence on China is already fueling a feeling of powerlessness among Western politicians. Globally, there are only about 20% of free resources in this highly strategic area, and many properties are simply too small for industrial exploitation. In many future applications, we speak particularly of the electromagnetically important metals such as neodymium, praseodymium, dysprosium and terbium. According to recent studies, demand will be at 5 times today's amount in 10 years due to the exponential growth of energy storage and power generation technologies. If e-mobility grows at 25% or more per annum, as currently expected, the industry will be in a veritable supply vacuum for precursors in as little as two years.
Canadian explorer Defense Metals has secured a deposit in Wicheeda, BC, that could supply in the foreseeable future. With the current signing of a non-binding memorandum of understanding with Sinosteel Equipment & Engineering Co. Ltd, things could even move much faster. The agreement includes various test work and information sharing, conducting processing tests, and collaborating on developing a potential concentrator. The goal of the testing is to establish a large-scale pilot plant at the Wicheeda rare earth property. The test work results will be used in conjunction with the ongoing Preliminary Economic Assessment to optimize the design for the future project. The test work is expected to take approximately 4 to 5 months and cost roughly USD 200,000.
The Wicheeda project is slowly taking shape and accelerating. Defense shares now have a chance to rebound from a lower level at CAD 0.24. The last breakout from February 2021 stopped at around CAD 0.74.
Gazprom - The gas giant will also play a role in hydrogen
If you think about energy-efficient raw materials, sooner or later you will come up with gas. Gas burns very cleanly, produces little CO2 and is far ahead in energy efficiency, i.e. power output per unit. Gazprom is one of the really big gas producers from Russia. The Company has made a brilliant turnaround since 2019.
Currently, business is stuttering a bit, as the Russian energy company has reduced gas exports following a fire at a processing plant near the western Siberian city of Novy Urengoy. According to Russian media reports, transport to the west via Belarus and Poland has already been halved to one million cubic meters per day. The previous volumes will continue to be transported via the Nord Stream 1 Baltic Sea pipeline and Ukraine. Gazprom had already planned lower transport volumes via the Yamal-Europe gas pipeline for the fourth quarter of this year. This pipeline runs from the Yamal Peninsula via Belarus to Germany.
Hydrogen could be an important addition to the business model. Gazprom recently stated that Russia will be the world's largest "blue" hydrogen exporter by 2030. This hydrogen is produced from natural gas, so the energy giant could well compensate for the likely decline in the natural gas business. Gazprom shares are trading in the region of their 3-year highs but are slowing down noticeably in terms of momentum. Valuation is still outstanding, with a P/E ratio of 5 and a yield of 6.5%.
Strategic metals and scarce commodities are driving stock market valuations. Sometimes it is not the scarcity itself but rather the future expectation of supply shortages, which makes producers popular asset classes. Gazprom is a blue-chip in this regard, Standard Lithium is trading on a lot of M&A fantasy, and Defense Metals remains a very promising explorer.