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Hyundai Motor Group and LG Energy Solution begin construction of EV battery cell plant in Indonesia; 10 GWh to start

Hyundai Motor Group and LG Energy Solution have begun construction of an electric vehicle (EV) battery cell plant in Indonesia to secure leadership in…

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This article was originally published by Green Car Congress

Hyundai Motor Group and LG Energy Solution have begun construction of an electric vehicle (EV) battery cell plant in Indonesia to secure leadership in the global battery electric vehicle (BEV) market.

Hyundai and LG Energy Solution announced that they held a virtual groundbreaking ceremony with the Government of Indonesia at the site of the planned plant in Karawang New Industry City, near Jakarta.

Participants from the Indonesian side were President Joko Widodo; Investment Minister Bahlil Lahadalia, and Coordinating Minister for Maritime and Investment Affairs Luhut Binsar Pandjaitan. Hong Woo-pyeong, CEO of Battery Cell joint venture and Youngtack Lee, Head of Asia-Pacific headquarters at Hyundai Motor Company, attended the ceremony.

Euisun Chung, Chairman of Hyundai Motor Group; Sung Hwan Cho, President and CEO of Hyundai Mobis, and Jong-hyun Kim, President and CEO of LG Energy Solution, virtually attended the ceremony from Korea.

Hyundai Motor Group is focusing its capabilities on becoming a global leader in the EV market, which is the key to securing future competitiveness. The plant is a part of these efforts. Starting with this plant, an EV ecosystem will be successfully established in Indonesia with the development of various related industries. Furthermore, we expect Indonesia to play a key role in the ASEAN EV market.

—Euisun Chung, Chairman of Hyundai Motor Group

Today marks a significant step in starting a new era of the EV battery industry in Indonesia, with the establishment of its first battery cell manufacturing plant in the country. Through the joint venture partnership, together, we are now a step closer to establishing the world’s first EV comprehensive supply chain. LG Energy Solution will do its utmost to foster the joint battery cell manufacturing facility into becoming a key base to take on the global EV market.

—Jong-hyun Kim, President and CEO of LG Energy Solution

In July 2021, the Group and LG Energy Solution signed a Memorandum of Understanding (MoU) with the Government of Indonesia to establish a joint venture (JV) in Indonesia to manufacture battery cells for BEVs. The Group and LG Energy Solution announced to invest a total of US$1.1 billion into the JV, each owning a 50% ownership stake.

The new battery cell factory will be built on a 330,000-square-meter parcel of land. Plant construction will be completed by the first half of 2023. Mass production of battery cells in the new facility is expected to commence in the first half of 2024. When fully operational, the facility is expected to produce a total of 10-GWh worth of NCMA lithium-ion battery cells every year, enough for more than 150,000 BEVs. In addition, the facility will be ready to increase its production capacity up to 30 GWh to meet the growth of future BEV needs.

Battery cells produced in Karawang will be used in Hyundai Motor and Kia’s EV models built upon the Group’s dedicated BEV platform, Electric-Global Modular Platform (E-GMP). The new factory will help Hyundai Motor and Kia produce vehicles with high efficiency, performance, and safety by supplying battery cells optimized for the two automakers’ BEV models.

The Group and LG Energy Solution expect to secure a stable supply of EV battery cells in upcoming years, as the global demand of EVs is expected to continue rising. Hyundai will contribute to increase the production efficiency of the plant with its expertise in vehicle and compartment manufacturing. The Group will also help the JV produce battery cells with most performance and safety with its integrated quality management systems.

The Indonesian government agrees to offer various incentives and rewards to support the stable operation of the plant as well.

Energy & Critical Metals

Benchmark: Lithium’s Price Rally Accelerates

Lithium price rises accelerated in the first half of September as surging demand and raw material supply concerns combined to push Chinese domestic prices…

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Lithium price rises accelerated in the first half of September as surging demand and raw material supply concerns combined to push Chinese domestic prices up to their highest levels since mid-2018 according to data from Benchmark’s Lithium Price Assessment.

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Lithium hydroxide and carbonate price rises accelerated to new levels in the first half of September. Source: Benchmark


Technical and battery-grade lithium carbonate prices increased by more than 20% in the first two weeks of September and are now up 188.9% and 215% respectively in the Chinese domestic market this year.

Carbonate price increases are once again outpacing lithium hydroxide, last seen in Q1 2021, and could soon race ahead, Benchmark said. China EXW lithium hydroxide prices rose 14.2% in the first half of September, up 162.7% year-to-date.

Throughout August and early September, the price rally for lithium chemicals and feedstock has been re-ignited on incredibly strong downstream demand, especially within the Chinese domestic market, which acts as a bellwether for the rest of the world’s lithium market.

—Benchmark analyst George Miller
 

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Energy & Critical Metals

Millennial Lithium Bidding War Bodes Well For Lithium Miners

On September 8, Millennial Lithium Corp. (TSXV: ML) announced that it received an unsolicited takeover bid from a foreign-based lithium..

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On September 8, Millennial Lithium Corp. (TSXV: ML) announced that it received an unsolicited takeover bid from a foreign-based lithium battery production company. The bid is reportedly $0.25 per share superior to the $3.85 all-cash takeover bid it received and accepted in July from China-based Ganfeng Lithium Co., one of the largest lithium producers in the world. 

Bloomberg reported on September 14 that the mystery bidder was likely Contemporary Amperex Technology Co., Ltd. (CATL), another China battery giant. Millennial has given Ganfeng until September 27 to amend its bid to counter the mystery bidder’s proposal.

The Ganfeng bid for Millennial equates to $377 million in cash. Factoring in Millenium’s net cash position of about $52 million as of February 28, 2021, Millennial’s takeover enterprise value per the Ganfeng bid is about $325 million. Millennium’s principal asset is its flagship Pastos Grandes lithium brine project in Argentina. Lithium, the lightest of all metals, is used extensively in the batteries of electric vehicles.

Millennial’s Pastos facility should begin production in 2024. Its projected battery and technical grade lithium carbonate output is 24,000 tonnes per year (tpy). Ganfeng’s willingness to pay $325 million – and another party at least $25 million more than that — for a project which is not scheduled to commence production for three years is noteworthy.

The bidding war between two very well-capitalized lithium battery producers is clearly a positive for Millennial shareholders. In addition, there are two key read-throughs for other stocks.

Millennial’s Pastos Grandes Projected Timeline

More specifically, the purchase price highlights the value of another South American-based lithium producer, Sigma Lithium Corporation (TSXV: SGMA). In June 2021, Sigma broke ground on its Grota do Cirilo hard rock lithium project in Brazil. It is scheduled to begin lithium carbonate production in 4Q 2022.

Its projected Phase 1 output, 33,000 tonnes of lithium carbonate equivalent, is 40% larger than Millennial’s target capacity. Phase 2 production could begin in 2023. Sigma’s enterprise value is nearly $650 million, or about twice Millennial’s likely takeout value. Given Sigma’s two-year time advantage to market, that differential may be too small.

Projected Timeline of Sigma’s Grota do Cirilo Phase 1 Project

Secondly, Ganfeng owns 51% and Lithium Americas Corp. (TSX: LAC) 49% of the Cauchari-Olaroz lithium brine project in Argentina. Cauchari-Olaloz, which has projected stage one output of 40,000 tpy of battery- quality lithium carbonate, is expected to commence production in mid-2022. If the facility operates well, it is certainly possible that Ganfeng (stock market capitalization of around US$38 billion) at some point could decide to buy Lithium Americas’ stake or Lithium Americas itself.

Sigma and Lithium Americas Have Solid Balance Sheets

Both Sigma and Lithium Americas are well capitalized. As of June 30, 2021, the companies have net cash positions of $40 million and $446 million, respectively. Sigma’s enterprise value is $849 million, and Lithium Americas’ is $3.18 billion.

(in thousands of Canadian $, except for shares outstanding) Sigma Lithium Corporation Lithium Americas Corp.
Cash – as of 6/30/21 $40,577 $641,250
Debt – as of 6/30/21 $531 $195,112
Net Cash $40,046 $446,138
Market Capitalization $889,410 $3,630,000
Enterprise Value $849, 364 $3,183,862

Lithium is a key element in most electric vehicle batteries. If electric vehicle demand were to reverse the trends of the past few years and start to slow, all lithium miners would likely be negatively affected. Also, if engineers at some point can develop a cheaper, more effective option than lithium, lithium producers would likewise be impacted.

A bidding war for Millennial at a rich price for a junior miner which is unlikely to produce lithium carbonate for three years, is a positive for more advanced lithium development companies like Sigma Lithium and Lithium Americas. Equally important, Sigma and Lithium Americas seem to be attractively valued relative to the ultimate takeover price for Millennial Lithium.

Millennial Lithium Corp. last traded at $4.09 on the TSX Venture.


Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Millennial Lithium Bidding War Reads Well For Peers appeared first on the deep dive.

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Energy & Critical Metals

This Will Help the Market Right Itself

Despite recent weakness, expect buybacks to help support the market … look for a break to new highs later this fall … a preview of the amazing technologies…

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Despite recent weakness, expect buybacks to help support the market … look for a break to new highs later this fall … a preview of the amazing technologies headed our way this decade

Coming into September, it seemed just about everyone was expecting a market pullback.

And whether it was a self-fulfilling prophecy, market dynamics, or just seasonal weakness, this month has, in fact, seen losses.

As I write Friday at lunch, the S&P and Nasdaq are down 1.7% and 1.3%, respectively, on the month. The Dow leads the losses, off 2.1% so far in September.

If your portfolio is in worse shape, that’s because pockets of the market have been underperforming the broader indexes for weeks now.

From CNBC:

About 15% of S&P 500 stocks are more than 20% below 52-week highs, but much larger swaths of the midcap and small-cap universe are down 20% or more. The latter groups are less tech-focused and more susceptible to an economic slowdown:

Slow motion deterioration
(percentage of stocks that are 20% or more below their 52-week highs)

  • S&P 500 15%
  • S&P Midcap 30%
  • S&P Small Cap 48%

Below are a handful of widely-owned stocks, as well as the percentage by which they’re now trading below their 52-week high.

American Airlines 26%… FedEx 20%… Nordstrom 41%… Pulte 26%… Eli Lilly 14%… Dupont 20%.

***What are we to make of this? Are we slowly slipping into a stealth correction?

Let’s go straight to our technical experts, John Jagerson and Wade Hansen of Strategic Trader:

After breaking to new all-time highs and briefly riding above up-trending resistance a few weeks ago, the S&P 500 started pulling back last week on some post-Labor Day profit-taking.

While this pullback has gotten the permabears out there all hot and bothered, this pullback is just that… a pullback.

It’s not the beginning of the end.

There’s just too much demand for U.S. equities to allow the S&P 500 to break below the up-trending support level that has been interacting with the index since May.

Daily Chart of the S&P 500 (SPX)

***One factor that will keep the bull market going

In John and Wade’s Wednesday update, they pointed toward a reason why stocks have support, despite the current volatility – share buybacks.

For any readers less familiar, when a company has extra cash, it can use it to buy back its own shares, in effect “retiring” or canceling those shares.

Assuming the company is still generating the same amount of profit, fewer shares will boost a company’s earnings per share (EPS). This is a benefit to shareholders.

Here’s John and Wade illustrating how this works:

For example, if a company earns $100 and there are 100 shares outstanding, the EPS is $1 ($100 / 100 shares = $1 per share).

Similarly, if a company earns $100 and buys back 50 shares so there are now only 50 shares outstanding, the EPS is $2 ($100 / 50 shares = $2 per share). The company didn’t increase its earnings at all, but by buying back its shares, it doubled its EPS.

Today, we’re seeing companies resume their share buyback programs following a COVID-19-related slowdown.

John and Wade provided the chart below, illustrating the ramp-up in buybacks here in 2021.

Chart showing how corporate stock buybacks are ramping back up post 2020Source: Standard & Poor's

Quarterly S&P 500 Buybacks (source Yardeni Research)

Back to the Strategic Trader update:

This increase in share buybacks among S&P 500 companies is good news. Buybacks had slipped during the pandemic, but they are making a strong comeback in 2021.

We expect more companies to announce increased buyback programs as we head into Q4. This should keep demand for S&P 500 stocks strong in the near-term.

So, returning to our question at the top of today’s Digest, what are we to make of the recent pullback in the market?

Here’s John and Wade’s bottom-line:

We’ve been here before.

The S&P 500 climbs to new all-time highs and traders take profits. This pushes the index lower, which attracts more buyers.

We expect this pattern to continue for the foreseeable future.

***Let’s end today with a fun look at the amazing technologies that will be in your portfolio tomorrow

Bank of America Global Research just released a 152-page research report that highlights 14 “radical technologies that could change our lives and accelerate the impact of global megatrends.”

According to the report, these technologies have a market size of $330 billion today. But by next decade, they could explode to $6.4 trillion.

As we’ve noted here in the Digest, the 2020s will be the most transformative decade in human history. That’s because technology is leading to exponential progress, not traditional linear progress.

The BofA report echoes this point:

The pace at which themes are transforming businesses is blistering, but the adoption of many technologies – like smartphones or renewable energy – have surpassed experts’ forecasts by decades, because we often think linearly but progress occurs exponentially.

Here are the 14 “radical technologies.” We’ll dig into a handful below.

  • 6G
  • Brain Computer Interface
  • Emotional Artificial Intelligence
  • Synthetic Biology
  • Immortality
  • Bionic humans
  • eVTOL
  • Wireless Electricity
  • Holograms
  • Metaverse
  • Nextgen Batteries
  • Ocean Tech
  • Green Mining
  • Carbon Capture & Storage
Graphic showing 14 amazing technologies coming this decadeSource: B of A Global Research

Here’s more detail on a handful of these moonshot technologies.

From the BofA report:

Brain Computer Interfaces: “As we reach a point where humans are unable to keep up with computers and AI, brain computer interfaces could help ‘level up’ humans with computers. Shorter term, brain computer interfaces hold solutions for paralyzed individuals and promise a new wave of innovation in gaming.”

Immortality: “Traditionally, aging has not been viewed as a disease that can be treated but this is changing. Actors in this space are increasingly looking to tackle the hallmark of aging via pathways such as ‘genomic instability, telomere attrition, mitochondrial dysfunction, and cellular senescence’ among others.”

eVTOL: “Electrical vertical take-off and landing vehicles that could provide an alternative mobility transportation solution to outdated infrastructure and overly stressed roads in urban settings.”

Holograms: “A technology capable of creating a simulated environment through light imagery projections that will allow everyone to come together in one virtual room, without having to leave their physical location.”

Metaverse: A “future iteration of the Internet, made up of persistent, shared, 3D-shared spaces linked into a virtual universe. It could comprise countless persistent virtual worlds that interoperate with one another, as well as the physical world and transforming markets such as gaming, retail, entertainment etc.”

It’s hard to look at this list and not be excited about what’s coming this decade – from both a societal and portfolio perspective.

We’ll keep you up to speed with the development of these trends here in the Digest.

Have a good evening,

Jeff Remsburg

The post This Will Help the Market Right Itself appeared first on InvestorPlace.

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