October 6th, 2020 | 09:13 CEST
VW, Rock Tech Lithium, Defense Metals, Tesla - scarcity causes price explosion!
The growth market of electric mobility will continue to pick up speed in the coming years. According to a study, the forecast number of new registrations of electric cars and plug-in hybrids will be 10.3 million cars in 2020, triple by 2025, and rise to almost 55 million units by 2030. The winners of this trend are primarily car manufacturers such as Tesla, VW, and BMW. There are highly exciting companies in the ranks of suppliers and producers that are profiting exponentially from the boom trends - both in terms of corporate profits and share price performance.
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Author:
Stefan Feulner
ISIN:
CA2446331035 , CA77273P2017 , DE0007664039
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Author
Stefan Feulner
The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
He is passionate about analyzing a wide variety of business models and investigating new trends.
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Demand for lithium batteries unchecked
Last week, Tesla boss Elon Musk announced on the occasion of "Battery Day 2020" that he will need twice as much lithium for production in the coming years as before. Tesla is aiming to invest directly in North American lithium projects. It is known, at least since Corona, that supply chains to China can be broken off. Companies such as Rock Tech Lithium Inc. which, among other things, operate a project in Canada, should profit strongly from the increased demand for lithium in the coming years. A complete takeover by a big player like Tesla would also be logical.
Endless material requirements - Rare Earths are becoming scarce
The situation is at least as dramatic when it comes to the scarcity of rare earths. Permanent magnets for electric motors are manufactured based on rare earth metals. The experts at Adamas Intelligence predict that the demand for rare earth oxides for use in magnets will increase from the current USD 2.98 billion to USD 15.65 billion in ten years. Above all, the analysts of Adamas Intelligence see strong growth in demand for magnetic rare earth elements such as neodymium, praseodymium, dysprosium and terbium.
Long-term threat of collapse
The short-term view of a period of only three to five years is seen as critical. The reason for this is that the demand for rare earth is growing so strongly that the already insufficient production capacities are likely to collapse. According to Adamas Intelligence, the mining industry needs huge investments to increase supply.
Dependence on China enormous
The dependence on China for rare earth elements is even stronger than for lithium. Although the world market share of China's production has shrunk in recent years from almost 94% to currently 80%, it is still so large that the "Middle Kingdom" does not only have control over pricing. Due to the still blazing trade conflict with the USA, China had already threatened to stop exporting rare earths in 2019. It would not only harm the United States, but also unsettle the entire global economy. As a result, the pressure for investments in North America and Europe to reduce China's share, is growing.
Well positioned in Canada
The mineral exploration company Defense Metals, founded in 2016, has achieved tangible success in this area. The company focuses on the acquisition of mineral deposits containing metals and elements used in the production of renewable energy technologies, such as rare earth magnets. The main focus is on the Wicheeda project in the province of British Columbia. According to the company, the mineral resources are 4.9 million tonnes at an average grade of 3.02% LREO (light rare earth metals), and inferred mineral resources are 12.1 million tonnes at an average grade of 2.90% LREO.
Study shows significant progress
In late September, the company received the final report of the study which was prepared by SGS, the world's leading inspection, verification, testing and certification company. Craig Taylor, CEO of Defense Metals commented: "The success of the flotation pilot and 1,200 kilograms of high-grade REE concentrate produced places Defense Metals and the Wicheeda REE deposit among rare company and opens the door to future hydrometallurgical pilot trials at SGS, with the ultimate goal of producing a Nd-Pr oxide product stream."
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