Global Energy Metals (TSXV:GEMC) is the leading vanguard for investors to gain exposure to a ground-breaking shift towards electrification and battery storage, the company highlighted in a recent interview.
The firm has been positioning for strength throughout the opportunities ahead in recent months. A 10-for-1 share consolidation to clean up its corporate structure completed in August 2020, while a “small but meaningful fully oversubscribed private placement” raised $659,000 in September 2020.
The proceeds were used to acquire an 85% interest in two strategically-important cobalt, copper and nickel projects, Lovelock and Treasure Box in Nevada.
Speaking to Arne Gulstane, head of company services for the TSX stock exchange, CEO Mitchell Smith laid out the investment case for GEMC today.
“Climate neutrality and the supply exposure to the core minerals that are essential to it are very much key to Global Energy Metals,” he said.“And our assets are in some of the world’s safest jurisdictions. That includes Nevada in the USA, Queensland in Australia, and Ontario in Canada. These are really primed for development.”
This point is key: 60% of the world’s supply of cobalt, for example, is currently produced from the Democratic Republic of Congo, a politically unstable nation whose mining sector has repeatedly been accused of using child labour. Amnesty International is among the NGOs that have highlighted the state of affairs, and cobalt mining giants like China’s Huayou Cobalt have now exited the African nation after years of international pressure.
Following a recent deal with Electric Royalties, GEMC also has equity stakes in other key battery metal resource companies to complement its main focus. “It really increases our exposure to the EV battery and energy storage markets,” said Smith.“This is a theme we’re going to explore as we broaden our exposure to this growing sector.”
The political will to protect and expand the US battery metals sector is now turning in GEMC’s favour.
On 30 September President Trump signed an executive order to spur domestic production of critical battery and rare earth metals. According to the order, 35 minerals are now registered as “essential to the economic and national security of the United States”, have supply chains that are too focused on imports, and also serve “an essential function, the absence of which would have significant consequences for our economy [and] national security.”
This very public prioritization is key to the future of the sector and puts GEMC in prime position, Smith noted, saying: “This really provides new pathways for greater government support for critical mineral mining.”
“It’s noteworthy in that there has been no other US administration since the Second World War that’s put forward such an aggressive set of policies aimed at providing financial and other assistance to the mining and processing of so many critical and strategic metals,” he added.
With the weight of the US government now at its back, GEMC’s Nevada expansion is looking like a very important move.
As readers will no doubt be aware, the world is undergoing a wholesale shift away from fossil fuels and towards electromobility, whether that’s in electric cars, electric trucks or e-scooters.
Sales to private citizens make up one portion of the market, but there is a potentially far more significant change underway in commercial freight, supply chain, government municipal projects, delivery and courier services, public transport, and industrial machinery.
With this in mind, it’s clear that the electrification of the world is only just beginning. Regardless, the impact on companies producing non-renewable fuels for vehicles is already being seen.
British supermajors BP and Royal Dutch Shell are the canaries in the coalmine for the oil industry. Both made painful dividend cuts this summer, in the case of Shell, its first since the end of the Second World War. And BP in particular surprised markets over the summer with a gloomy forecast for its key commodities, writing down the value of its oil assets by £14 billion. Spending on oil and gas production would fall 40% over the next decade, the company said, while renewables investment would rise to a minimum of $5 billion a year. Market analysts called the transformation strategy “major, positive, thoughtful and largely unexpected”.
But GEMC and its early investors are the ones who saw this shift coming.
Supporting this wholesale change is the new development of mass, city-sized energy storage facilities across the globe. Tesla is the most obvious case, with its numerous Gigafactories. But there are far-less visible and customer-facing companies at work.
For example, LS Power has just brought its 250MW Gateway project online in San Diego, California, with some 67% higher output than the world’ previous biggest battery storage project, Hornsdale Power’s 150MW capacity operation in Australia.
Ever more and higher-rated plants are in construction now in a bid to provide the infrastructure for this new utility segment.
That’s why the key metals needed to create these giant battery storage projects are in such high demand.
“As early adopters to the battery metal sector with proven track records we formed this company to provide our investors exposure to what is now becoming a mega-trend,” said Smith.
Author: Mark Sheridan
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