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February 21st, 2022 | 12:46 CET

Varta, Standard Lithium, Edison Lithium - The demand for lithium is going through the roof!

  • Lithium
Photo credits: pixabay.com

E-mobility is permanently changing today's automotive industry. More and more electrified passenger cars are finding their way onto our roads, and the growth prospects for this booming industry are expected to improve even further in the coming years in light of increasing climate concerns. The Boston Consulting Group estimates that electric cars will account for 47% of global markets by 2025, up from 12% in 2020 - that is a very bold forecast! But it does show a way forward. Thanks to the accelerated acceptance of environmentally friendly vehicles among consumers, one metal, in particular, is moving into the spotlight: lithium. And it is here that investors should pay attention.

time to read: 4 minutes | Author: André Will-Laudien
ISIN: VARTA AG O.N. | DE000A0TGJ55 , STANDARD LITHIUM LTD | CA8536061010 , Edison Lithium Corp | CA28103Q1090

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

     

    Varta - Rumors of big deals are tugging at the share price

    Investors do not want to let their beloved Varta off the hook quite yet. The potential supplier of a new super battery is still being sought, and many suspect that it will come from Ellwangen. Preliminary figures from 2021 have been missing for a long time, but there are rumors about possible new orders with a German premium manufacturer. The share price jubilated with over 10% plus! However, the news did not last long because it quickly went south again after a short flare-up above EUR 96. In mid-February, the paper had already slipped to EUR 85.90 with large turnovers. In our last reports, we had pointed out the importance of the EUR 100 mark.

    To put the persistent rumors into perspective, we would like to point out to speculators that everyone is currently talking to everyone in the "battery for e-mobility" sector because revolutionary results are urgently needed. The fact that an automotive executive is also sometimes spotted in the executive suite of Varta is therefore not a big surprise, but rather the rule. Porsche, the sports car manufacturer, is already known as a prospective Varta customer for high-performance batteries.

    The good news is that Varta will spend another EUR 33 million on the research site in Graz by 2030. Varta's share price will remain very volatile for the time being; keep watch for the next figures on March 31. Only then will we get official figures and hopefully concrete outlooks for the subsequent quarters. We currently keep the Varta share, which was stopped at EUR 105, on the watch list.

    Edison Lithium - A future supplier of battery metals

    As the battery is the heart of every electric vehicle and lithium is the most critical metal in the current design so far, the demand for lithium is growing explosively. The lithium market is thus receiving the most attention from EV manufacturers, along with cobalt, nickel and manganese. But other metals are also being meticulously tested for their battery properties. With such a high pace of research, a breakthrough is very likely to be announced in the coming months.

    To counter the shortage of raw materials, more and more explorers are flocking to the already known deposits in South America. Lithium remains one of the most essential raw materials in the mobility revolution. However, current supply and production capacities are lagging well behind the needs of high-tech companies. As a result, the price of battery-grade lithium carbonate has exploded in the last 24 months, increasing by over 500%. Around 85% of the world's lithium production comes from Chile, Argentina, and Australia.

    A new player on the horizon is Canadian explorer Edison Lithium, known as Edison Battery Metals, until November 2021. The Company has focused on the exploration, sourcing and development of cobalt, lithium and other energy metal deposits. In doing so, the Company's acquisition strategy focuses only on mineral properties in areas with proven geological potential.

    Last year, Edison already secured prospective lithium properties in Catamarca Province, in the Argentine portion of the world-renowned "Lithium Triangle" for USD 1.85 million. In addition to this asset, the Company owns a historic cobalt project in Ontario, Canada, where gold has also been found and mineralization of nickel, copper, lead, and zinc. The stock is listed in Canada under the symbol EDDY and has a market capitalization of CAD 14.8 million. For speculative investors, EDDY is another aspirant in the "battery fantasy" sector.

    Standard Lithium - Lower and lower at constant rates

    The poor health of Arkansas-based lithium protagonist Standard Lithium (SLI) refuses to abate. Now, SLI shares have more than halved from their November high of CAD 15.7. In the recent sell-off, the price even fell back to CAD 6.60, so it seems there are still persistent short-sellers at work.

    The evident weakness is compounded by some class-action lawsuits in the US that have been around since the SLI share first crashed. It is mainly US law firms that are now putting on the pressure, a well-known sport among resourceful lawyers, which, if successful, generates enormous income for the law firms in particular. The starting point is allegedly misleading statements or undisclosed facts about the extraction efficiency of the LiSTR direct extraction technology. The argumentation of the lawyers always comes down to the same point: Standard Lithium is said to have presented the results of the pilot plant too positively. So far, so good - presumably, the goal is to win out-of-court settlement offers.

    The legal issues could considerably burden the SLI share price. In the cases at hand, Standard Lithium has already responded to the short-sellers accusations and rejected them. If the lawyers do not bring in new guns, the whole thing could soon come to nothing. Until then, however, the highest volatility in the share is to be expected.

    Standard Lithium still sees itself on a good path to becoming the first major lithium producer in the USA. If the support zone at EUR 4.5 to 5.0 holds, it could also go up again more clearly. However, a further slide is possible at any time given the impending legal proceedings. In the positive case, however, do not expect any more multiples - because that was more of a nice hype story from 2020/21.


    Battery metals and research on how to mix them more efficiently should provide the next technological leap in the coming years. Standard Lithium and Varta are "Fallen Angels" of this interesting sector. Edison Lithium can still deliver many surprises in the early stages of its business.


    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

    André Will-Laudien

    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.

    About the author



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