February 25th, 2022 | 10:15 CET
Varta, Almonty Industries, NEL: New battery metal and hydrogen hope
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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
Varta: Professionals are convinced, but the share weakens
Varta's stock has long been the darling of German investors. The brand has a reputation in the world, the products convince electronics giants like Samsung and Apple, and then came the plans for its own batteries for e-cars. This mixture of factors catapulted the share far into the triple-digit range last year. But disillusionment quickly set in. It will be a while before Varta is truly ubiquitous on our roads. Investors, therefore, became impatient. Analysts also recognized that the share price had risen a bit too far and called for price targets in the low three-digit range. In the meantime, however, things are getting even worse for the share. The share has even torn through the EUR 90 mark in the wake of the general market weakness. What happens now?
Currently, there is little news from Varta. That lets the value move a little out of focus. However, if you talk to representatives of other German industrial companies, they are full of praise for Varta and emphasize its unique selling points. Varta should have everything it needs to be competitive in new developments in battery technology. However, Varta's e-car plans are still unlaid eggs. The fact that the Company does not use every event for a news report speaks volumes for Varta. It is only announced when it is ready.
Almonty Industries: Here competence and large deposits come together
The Canadian tungsten specialist Almonty Industries is similarly defensive. The Company has been producing tungsten in southern Europe for years, thus conserving important processes around mining the element, which is considered challenging. With the Sangdong mine in South Korea, Almonty Industries is launching the largest tungsten project outside China. CEO Lewis Black recently explained the Company's current situation in detail in a presentation at the International Investment Forum (IIF).
It has been known for some time that tungsten can also play an important role in batteries for electric cars. At the end of last year, Black explained in an interview why tungsten would become more important for batteries in the future: "Where there was cobalt before, there will be tungsten in the future. Tungsten is extremely heat resistant and offers advantages in battery charging performance and safety. Tungsten also allows more nickel to be incorporated into batteries for e-cars, which in turn extends the range. Faster charging with longer range sounds like improvements every driver would like to see, doesn't it?" said Black at the time. The CEO believes the technology, already common in South Korea, will gradually gain traction in the rest of the world. For tungsten, which has been produced primarily in China, that would be a new signal of shortage. Since Almonty Industries will soon be one of the largest producers in the world, investors should look into the stock.
NEL: There is life in the old dog yet
Many investors may have already looked at NEL's stock more than they would like. A year ago, the hydrogen stock was considered an absolute high-flyer. But then came the crash. One of the reasons for the share price losses was that more and more companies from the automotive industry were turning to battery technology - hydrogen was considered out of the picture. However, the Ukraine crisis showed that storing regenerative energy can make perfect sense. It is here where hydrogen could play a decisive role. Hydrogen could also play a role as an energy carrier in ships or even aircraft in the long term. From a chart perspective, the share is extremely battered. If the turnaround does not come soon, it could fall below EUR 1. However, this does not mean that NEL is written off. The Company remains comprehensively positioned and is therefore attractive in the long term.
The market for energy sources is always on the move. A few years ago, cobalt was considered the trending metal, now tungsten seems to take this role. Industrial companies like Varta should be able to work with both elements. But the key will be how Varta can control costs. Even NEL could become interesting again in the long term. However, the share is currently out of steam. The stock of Almonty, which has stabilized recently, remains a speculative opportunity.
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