10. November 2021 | 12:11 CET
ThyssenKrupp, Almonty Industries, Salzgitter: "Green" steel as a growth market
It is not without reason that the quarterly figures of steel producers are regarded as a barometer of economic development - after all, steel is used in many industrial products. Whenever companies invest in new capacities, such as buildings or infrastructure, steel is used. A new trend is so-called "green" steel, which does not use coal-fired power in its production and thus saves CO2. It also pays off for customers. After all, the CO2 from purchased raw materials also counts in the carbon footprint. Schaeffler recently secured "green" steel from Swedish startup H2 Green Steel. A sign that sustainability has also reached this sector. We highlight three exciting stocks and do the sustainability check from an investor's perspective.
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ISIN: THYSSENKRUPP AG O.N. | DE0007500001 , ALMONTY INDUSTRIES INC. | CA0203981034 , SALZGITTER AG O.N. | DE0006202005
ThyssenKrupp: ESG truisms no longer blow anyone's mind
The last quarters were positive for ThyssenKrupp: Sales climbed and order intake was also positive. Earnings also clearly exceeded the figures for the comparable prior-year periods. The Company has increased its efficiency and opened new logistics centers, which are expected to work faster and better thanks to automation and digitalization. The Management Board even raised its forecast for the full year in the summer, but a loss is still likely to remain. But apart from the positive figures, what about sustainability?
Like almost all companies, ThyssenKrupp has devoted many colorful photos and flowery texts to the subject. In addition to more involvement in local projects, an open dialog and the inclusion of local stakeholders are intended to strengthen ThyssenKrupp's image. This type of corporate management can also lead to certain risks - such as strikes or other local problems - being identified at an early stage and the Company being able to take countermeasures. On the subject of environment and energy, the Company is committed to increasing long-term earning power and leveraging synergies. A green conscience and good figures should therefore not contradict each other. To this end, the Company has bundled all environmentally relevant activities in a central management system and thus wants to turn the suitable screws effectively to implement sustainability successfully. It will probably be a while before the share price can continue to rise sustainably - after an increase of 121% over the year, ThyssenKrupp is fairly valued.
Almonty: Gigantic tungsten mine with 100% green energy
The Almonty Industries share is lagging behind its fair valuation - at least if you compare the past years' development with the share price development. Almonty Industries has been successfully mining tungsten in Southern Europe for years. However, with the Sangdong mine in South Korea, the Company has opened a new chapter. The project is considered the largest tungsten mine outside China. China dominates almost the entire market for tungsten. Whenever steel is to become particularly heat-resistant and robust, tungsten is used in the alloys. Since tungsten is also irreplaceable in these properties, the element is considered critical. Tungsten deposits also sometimes present difficulties in mining and exploration, which is why many geologists who have previously searched for other elements are happy to leave the exploration and mining of tungsten to proven experts. Almonty's team has been considered such experts for years.
When it comes to sustainability, Almonty is also leading the way. The Panasqueira Mine in Portugal is to have a photovoltaic plant with a capacity of 2.52 MW, which will cover about 21.5% of the mine's total energy needs. For Sangdong, the Company is looking at further optimization to reduce its environmental footprint. Already today, 100% of the energy for Sangdong comes from renewable sources. Therefore, tungsten from Almonty's mines is also particularly valuable from a sustainability point of view - after all, current standards take the entire value chain into account. Almonty is, therefore, not only competitive with China because of its long mine life and the size of the project in South Korea, but it can even catch up with the Chinese in terms of eco-balance. The share has hardly moved in the past three months and is trading around EUR 0.60 in Germany.
Salzgitter: The Germans can also do "green" steel
On a one-year horizon, the Almonty share has "only" gained around 50% - and that despite the groundbreaking developments surrounding the gigantic Sangdong mine. In addition to ThyssenKrupp, Salzgitter's stock also rose much more strongly in this period, climbing 159%. Here, too, the quarterly figures and increasing sales of rolled steel provided tailwind. Salzgitter has identified the hot-dip galvanized steel business as a growth area and intends to invest in this sector. To meet the requirements of sustainability, Salzgitter is focusing on recycling. The Group is also counting on reducing CO2 emissions in steel production by up to 95%. Green hydrogen and a special process are being used to achieve this.
Both ThyssenKrupp and Salzgitter do not have to hide from sustainable competitors from Sweden. However, investors should still be cautious about the extent to which the shares of the industrial giants still have potential. Given the relatively lower performance and the convincing ESG program, investors can also focus on Almonty Industries. The potential of the Sangdong mine, which is powered by green electricity, does not yet seem to have been fully grasped by the market.