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February 8th, 2022 | 11:23 CET

Varta, Nel ASA, Almonty Industries: Get in now?

  • Tungsten
  • Electromobility
Photo credits: pixabay.com

The electric car is currently outpacing the combustion engine: around 350,000 pure e-cars were registered in Germany alone in 2021. According to the Center of Automotive Management (CAM), this means that the market share has almost doubled to 13% in one year. Germany is now the third-largest single market for pure electric vehicles after China and the United States. However, according to CAM, China is ahead with around 2.7 million electric vehicles. Nevertheless, due to global subsidies, the trend toward electromobility will continue, creating opportunities for investors. The winners in electromobility include battery and raw material producers such as Varta and Almonty Industries. Demand for hydrogen - and therefore Nel - will also increase. All three stocks have lost significant ground. But there are positive developments. Is it worth getting in now?

time to read: 3 minutes | Author: Fabian Lorenz
ISIN: VARTA AG O.N. | DE000A0TGJ55 , NEL ASA NK-_20 | NO0010081235 , ALMONTY INDUSTRIES INC. | CA0203981034

Table of contents:


    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] 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

    Full interview

     

    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.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Fabian Lorenz

    For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.

    About the author



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