March 23rd, 2021 | 13:56 CET
Varta, Rock Tech Lithium, Millennial Lithium - all signs point to growth
Electromobility and technology are inextricably linked to the topic of energy storage. Leading scientists predict lithium batteries and lithium-ion batteries will continue to dominate this decade. Market experts predict a fivefold increase in lithium demand by 2025. In this context, it is becoming increasingly important that lithium deposits outside China are developed to create the greatest possible security of supply. We introduce you to two companies that could become important lithium producers in the future. We also take a closer look at Varta's plans to enter the e-mobility market. Who is the most significant yield driver for your portfolio?
time to read: 3 minutes
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Author:
Carsten Mainitz
ISIN:
DE000A0TGJ55 , CA77273P2017 , CA60040W1059
Table of contents:
"[...] 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
Author
Carsten Mainitz
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
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VARTA AG - the next growth spurt?
In mid-February, Varta disappointed many market participants with its preliminary figures for the past fiscal year and its subdued outlook. One month later, the Group published new, ambitious growth plans, which boosted the share price significantly in the short term. At the current price level of around EUR 131, the Swabians are valued at EUR 5.3 billion. The share still has a gap of EUR 50 to the interim high reached at the beginning of the year.
On March 16, the Group announced its intention to enter the production of batteries for electric cars. The new cells are to be produced on a pilot line at the Ellwangen headquarters by the end of the year and then be used in vehicles in the premium segment. According to press reports, talks are already underway with several automakers. The Company, which has so far generated high profits based on its strong market position in microbatteries, which are used in wireless headphones, is expanding its business activities. Whether Varta can transfer its technology and innovation leadership in the area mentioned above remains to be seen.
With the announced strategic step, Varta now delivers a new growth story. However, this step is also associated with risks. The market is highly competitive and many Asian players have secured a strong market position alongside Tesla. But no opportunity comes without risk. If Varta succeeds in forging one or more good partnerships, the Group will be opening a new and exciting chapter of growth.
ROCK TECH LITHIUM INC - on the way to becoming a producer
Lithium shares have developed phenomenally in recent months. This is also true for the shares of the Canadian Rock Tech Lithium. Rock Tech Lithium owns a property in the Georgia Lake area in Ontario. Lithium mineralization was discovered here as early as the mid-1950s and explored in subsequent years. In 2009, Rock Tech Lithium acquired the licenses and continued developing the project, including several drilling campaigns to date.
The Company's primary goal is to become an integrated supplier of lithium and enter production in 2023. A central component of the project is the construction of a lithium hydroxide converter in Saxony-Anhalt. With this dedicated chemical plant, the Canadians aim to become an integrated producer of battery-grade lithium hydroxide and a strategic partner for the electric vehicle and battery storage industries in Europe. The Company's proximity to Germany and Europe is multi-faceted.
For one, the Chairman of the Board is German Dirk Harbecke, who spoke at length about Rock Tech Lithium's growth plans in an interview with kapitalerhoehungen.de earlier this month. But directors and advisors are also European industry experts. A few months ago, well-known German investor Christian Angermayer also invested in the Company through his family office. The inflow of funds will be used for further project stages.
On the way to production, a pilot plant is to be built, providing proof of concept. Given a multiplying demand for lithium in the next few years and the need for a supply source outside China that is also sustainable, the Canadians are playing excellent cards. With a current market capitalization of CAD 290 million, the Company is still far from reaching its zenith if the next growth steps are implemented successfully.
MILLENNIAL LITHIUM CORP - powerful capital injection received
Millennial controls over 20,000 hectares of prime land in the heart of South America's famed "Lithium Triangle," home to the world's most prolific lithium deposits. The Company is advancing two lithium projects to a production decision in Argentina.
The quality and prospects of the projects attracted prominent investors, including Sprott Capital Partners, in February. A total of 8.625 million share certificates at CAD 4 were placed, representing a volume of a considerable 34.5 million. The project is to be further developed with the inflow of funds. Production is expected to start at the Pastos Grandes project in two years. Companies operating in the region include SQM, Albemarle, Livent Corp. and Orocobre.
In January, the share price was at a high of CAD 5.20. Currently, at prices of around CAD 3, the Company is valued at around CAD 300 million. With its bulging coffers, Millennial can now focus on production. Two years is a manageable period of time. Then the share price should be significantly higher.
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