November 4th, 2021 | 15:10 CET
Varta, Manganese X Energy, Standard Lithium: Battle for the best battery!
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"[...] Nickel, therefore, benefits twice: firstly from its growing importance within batteries and secondly from the generally growing demand for such storage. [...]" Terry Lynch, CEO, Power Nickel
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.
Varta - Waiting for an update from Ellwangen
Ellwangen-based Varta AG is on track with very ambitious battery development goals. With a production volume of more than one billion units per year, Varta has so far dominated the market with its micro-batteries for hearing aids and headsets. At the beginning of the year, the battery manufacturer decided to tackle the next, much larger growth market of e-mobility. Of course, this project will not be realized overnight because high development costs are the first step before potential sales.
The high-tech Company could not meet market expectations with its latest figures, although the share price had also risen to EUR 165 in the run-up. This time, the recovery after the September price slump to EUR 110 was not quite as rapid, and the 200-day line at just over EUR 130 was the end. In the meantime, a 20% trading corridor between EUR 110 and 135 has been established - more is not possible for trading.
On November 11, the time will come again: Varta will report on the 3rd quarter of 2021. Investors had already experienced in February, when the share price plummeted by 40% from EUR 180 to EUR 105, that smaller disappointments can lead to a larger price drop. It was similar to the half-year figures, but the movement was from EUR 165 to only EUR 115. The last purchase at EUR 110 was recently stopped out at EUR 128.50. Currently, one should be able to confidently wait for the latest figures and an update on the outlook for Varta.
Manganese-X Energy - The cobalt substitute is becoming increasingly important
Warehouses seem to be running dry throughout the raw materials sector if buyers from the high-tech industry are to be believed. Especially the traffic jams in front of the ports lead to further losses in the just-in-time delivery cycle of the industry at the suppliers and large OEMs. Battery-relevant metals such as lithium, cobalt, graphite and manganese are currently very difficult to obtain. That leads to price exaggerations in the spot market that can hardly be explained compared to the shorter history. Some market participants, e.g. in the construction sector, are reporting increases in the purchase prices of raw materials of up to 70%. Price calculations considered to be in line with the market at the beginning of the year are now absurd.
The raw material manganese is also in extremely short supply, but its oxide is an indispensable component of lithium-ion batteries and other energy storage systems. For the automotive industry, this situation, if it persists, could become a showstopper. Already, buyers of certain models are waiting a few months longer for delivery than the salesperson at the table had calculated. The bottleneck is again the Middle Kingdom; here, an export ban has even been imposed for strategic metals in the interim.
A new supplier for manganese could be the Canadian Company Manganese X Energy Corp. It is currently the only listed manganese company in Canada and the United States striving to commercialize a promising manganese deposit. Strategically, it has set its sights on bringing its Battery Hill project into production. In the emerging e-mobility market, growth rates of over 30% per annum are expected in the next few years, making the opening of new mining and processing sites profitable.
From a sustainability perspective, cobalt is to be replaced in the long term, and more climate-friendly processes for raw material processing are to be introduced. Subsidiary Disruptive Battery Corp. is on a mission to develop an HVAC (Heating, Ventilation and Air Conditioning) air purification system for cleaner, healthier air that will mitigate COVID-19 and other contaminants on surfaces, and in the air. Manganese X joined the newly formed Battery Metals Association of Canada (BMAC) trade organization in October.
Manganese X Energy shares are still barely discovered and can currently be ordered for CAD 0.32. With around 124 million shares, the Company weighs in at just EUR 39 million. A lot of future for a small investment - a suitable addition for progressive thinking investors.
Standard Lithium - Up and away
Standard Lithium (SLI) started as a EUR 30 million company a few years ago and has consistently continued its strategic build-up to become a battery raw material supplier. Together with German specialty chemicals company Lanxess, SLI is focused on the rapid development of its flagship 3.14 million ton indicated LCE resource property located in southern Arkansas. This region hosts North America's largest brine-producing area with more than five decades of commercial production opportunity, existing chemical processing infrastructure, and abundant, low-cost electricity, and access to water sources.
Standard Lithium's share is one of the shooting stars among e-mobility stocks, gaining a full 680% over 12 months alone. The market capitalization developed to about USD 1.7 billion during this time. Despite the strong increases, the share is not coming to rest. The share price has doubled again since a month ago, and the analysts' former price targets have long since been reached.
This is how things can go when an interesting project comes onto the market at the right time, and investors are willing to look past the several-year gestation period and high financial investment of a lithium production plant.
The strong trend toward climate protection is driving the topic of e-mobility into new dimensions. Car manufacturers, suppliers and raw material companies are pulling together, but the supply situation is complex. Varta and Standard Lithium are already a few years down the road in their development, and the still unknown Manganese X Energy can develop just as rapidly.
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