February 8th, 2022 | 11:23 CET
Varta, Nel ASA, Almonty Industries: Get in now?
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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
Almonty: 2022 will be exciting
Lithium dominates the headlines when it comes to critical raw materials for batteries. But as is so often the case, it is worth looking at the second tier. There, you quickly come across tungsten. The lustrous white heavy metal is characterized by its heat resistance. Due to its high density, the metal is found in classic sectors such as oil and gas, mining and chemicals, but also new applications such as charging stations for e-cars, 5G networks and semiconductors. In the e-mobility sector, tungsten is on track to outpace environmentally harmful cobalt, increasing demand and prices. The price of tungsten APT (ammonium paratungstate) has exceeded USD 300 per metric ton unit (mtu) for the first time in three years. In addition, there is a political tailwind: the EU lists tungsten high on its list of critical raw materials. Availability is also a critical issue, then there is a quasi-monopoly by China, which commands about 85% of global production.
Canadian explorer and producer Almonty Industries - incidentally, the major shareholder with around 12.2% is Deutsche Rohstoff AG - is on its way to help break up this quasi-monopoly. The Canadians are already producing at two mines in Portugal and Spain. There, Almonty expects increasing margins. However, the project in South Korea makes the stock really interesting. In Sangdong - close to Samsung, Kia and Hyundai - Almonty is currently building a new mine that is fully financed. Among other things, it has secured a KfW loan.
Once the final permits have been obtained, production is scheduled to start in the fourth quarter of 2022. When full capacity is reached, Almonty will account for around 30% of non-Chinese tungsten production and reduce dependence on the West. At that point, the stock should also begin to break even. In recent weeks, it has shown stability in the challenging environment and continues to trade in its corridor between CAD 0.80 and CAD 1.05. For further details, interested parties can refer to a study on researchanalyst.com.
Varta: New impetus at the end of March?
The Varta share has had a weak start to the year. While it held up quite well at around EUR 120 until the end of December 2021, it quickly headed south to EUR 94 in the new year. But strategically, the battery manufacturer seems to be developing positively.
As the "Welt am Sonntag" reports, Varta recently founded the subsidiary Pertrix V SE, based in Ellwangen. The business purpose is primarily the acquisition and management of "company investments in the field of electromobility." Exactly what Varta plans to do with the new subsidiary is not yet known. The Company intends to provide details on the new subsidiary at the end of March. What is clear is that Varta will continue to invest in e-mobility in the current year. First, in April 2021, the V4Drive battery was presented as a booster for performance vehicles and Porsche was won as the first customer. In October 2021, this was followed by the announcement that the V4Drive would also be offered in a larger format for use as a fully-fledged battery for e-cars in the future. Series production of up to two GWh per year is scheduled to start in 2022/2023.
Nel ASA: IRENA gives hydrogen a tailwind
Nel shareholders have also had little joy in recent weeks. The share price has almost halved from its high of around EUR 2 in October 2021. It is now trading, slightly recovered, at around EUR 1.27. The hydrogen share is getting a tailwind from positive industry prospects.
The International Renewable Energy Agency (IRENA) has published its current estimates up to 2050. By then, hydrogen is expected to cover around 12% of global energy consumption and thus be responsible for 10% of the reduction in greenhouse gas emissions. It is assumed that at least two-thirds of the hydrogen will be produced "green," i.e. by electricity from renewable sources. According to the experts, this development would massively change the global energy market and create new players, trade relationships, and transport networks. Massive investments would be needed to build the value chain: Almost EUR 11 trillion within the next 30 years, IRENA estimates. While the 2020s are likely to be dominated by the race for technology leadership and infrastructure development, demand for hydrogen will not really take off until the 2030s.
The energy and mobility transition and the raw materials and technologies required will continue to move the stock market. At Varta, things could get interesting at the end of March. The closer Almonty gets to the start of production in Sangdong, the more exciting the stock should become. The race for market share in the hydrogen market is on, and Nel is one of the few pure plays in the industry.
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