18. March 2021 | 06:05 CET
SunMirror, Barrick Gold, NIO, Volkswagen: Megatrend sustainable battery metals
There is no doubt that the mobility of the future will be electric - at least if you believe Volkswagen. A few days ago, the global corporation presented a strategy for its battery production as part of its Battery Day. But batteries need raw materials and these raw materials have become increasingly scarce in recent years. There was already a boom around lithium in 2016. Prices have calmed down again, but many a small supplier went off the market. This is now taking revenge. When Volkswagen wants to double the number of electric cars it sells, raw materials are in short supply. How can investors use the situation for themselves? Read on.
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ISIN: CH0396131929 , CA0679011084 , US62914V1061 , DE0007664039
"[...] 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
SunMirror: Modern raw materials company turns the "green" wheel
To be able to install batteries in electric cars at all, these batteries have to be manufactured. Different metals are required for this. The Swiss Company SunMirror focuses on participating in projects around critical metals. These include lithium, magnetite, nickel and also gold. Among others, SunMirror is working on 3 projects in Western Australia.
To be competitive with larger mining companies, such as BHP Group or others, the Swiss Company has focused on lean processes right from the start. As a result, this brings the advantage of being able to react to current developments in the market. One such development, for example, is the political crisis in Myanmar and the resulting increase in demand for battery metals that do not come from China. Sunmirror points out that its two projects Mt. Keith and Moolyella in Western Australia are able to tap into the demand for such critical metals in the expected super cycle. In addition to lithium, the Swiss' potential supply includes nickel, cobalt, gold, rare earths, iron ore and even tin.
The latter industrial metal climbed rapidly during the past few weeks alone, recently reaching a price not seen in the commodities market since 2011. At SunMirror, the consensus is that demand for battery metals will trigger a commodity bull market. The chip industry is also consistently demanding metals. The Internet of Things and the rise of mobile applications are likely to be another driver in this context. Simon Moores of analyst firm Benchmark Minerals has already described the development around lithium and other battery metals as a "gold rush on steroids".
SunMirror could strike a nerve in the market with its latest decision to accelerate the development of projects around metals currently in demand. The share is currently only listed in Düsseldorf and Vienna. However, an imminent listing in Frankfurt and a further listing on the London Stock Exchange (LSE) is to follow early summer. The company should then be on the lists of even more investors.
Barrick Gold: Diversity is lacking here
While innovative and young companies, such as SunMirror, are flexible enough to adapt their orientation to the market, gold giant Barrick Gold has been suffering for months from the sluggish gold price. Over a year, the stock has yielded a return of only 15%. The gains after the price collapse precisely one year ago, the share has partly lost again. Most recently, the Barrick share price went up a bit because the Company was rumored to be interested in GoldFields. This elephant wedding could make sense for Barrick. GoldFields is powerful in South America, Africa and Australia and would offer Barrick large projects with correspondingly long remaining terms.
But GoldFields' most interesting large projects are in South Africa, of all places. There, strikes occur time and again, as the unions traditionally have a great deal of influence. Production often falls flat for several months as a result. Does Barrick Gold want to take this risk? However, the speculation shows that the pressure to unite is growing within the industry. Barrick's share price did not get going after the pandemic's outbreak, despite the liberating blow in gold. The share is not very interesting at the moment, because apart from gold, it only has a tiny copper business to offer. However, demand is currently rising for other metals.
NIO: How sexy can Chinese manufacturers still be in the future?
One of the demand drivers is the Chinese Company NIO. The manufacturer of electric cars has long been considered an insider tip and shone around the turn of the year with the presentation of a sedan that has a range of 1,000 kilometers. As a Chinese Company, NIO is likely to benefit from the numerous sources of critical metals that Beijing has tapped in recent years, but the market is currently moving in a different direction.
With Volkswagen's announcement that it wants to push the electrification of mobility and establish its supply chains around batteries, awareness of sustainably mined raw materials is rising. For carmakers like Volkswagen, the entire supply chain's sustainability could be the selling point par excellence - modern mining companies could also benefit, such as SunMirror, which is driving forward raw material projects outside China with a focus on sustainability.