RE:RE:SCY is already a battery technology companyCurtis62 wrote: Hope your right, but what do you build that on ? 5-10 CAD !!
I will try to answer this question from a theoretical point of view, instead of giving you all sorts of calculations largely based on my own assumptions. Here we go.
This high share price (in the foreseeable future) is due to SCY being able to create a
sustainable competitive advantage. It has to do with certain characteristics of the company and characteristics of the market the company is operating in. Let me start with company characteristics.
This is about owning
intellectual property (IP). Patents are intangible resources/assets that could from the basis for a competitive advantage. This idea is captured in the resource-based marketing.
https://strategicmanagementinsight.com/topics/resource-based-view.html We all know about SCY’s growing list of patents: CMR, HPA, Sc master-alloy, Sc in LiBs, the list goes on and on. With the right kind of execution power (via partnerships) these can all be turned to viable profit models.
How about the
market characteristics?. The scandium market is upcoming, I think we all agree on that; there’s a bright future for scandium. But currently it’s not a very attractive market for a junior to operate in. Needs no further explanation. To me it makes perfectly sense that SCY is moving away from it (and will return when the time is right). Resource based marketing has led them into the (EV) battery materials …
The unstoppable transition, away from fossil fuels in the auto industry is the all-important driver for the EV Battery makers. Demand for EV batteries is going to ’explode’ in the years to come. It’s not unthinkable that car makers/ EV battery makers will at some point suffer from shortages of battery materials, like the current shortage of chips.
https://www.wsj.com/articles/global-chip-shortage-set-to-worsen-for-car-makers-11619708393 Now back to theory. How does the world look like from a battery materials supplier’s perspective going forward? As you’ve probably guessed, this is where I see SCY transitioning to. We can use Porter’s five forces model to examine whether becoming a supplier of battery materials is an attractive way to go (for SCY).
https://blog.v-comply.com/porters-five-forces-market-attractiveness/ EV Battery materials suppliers (CMR from copper/lithium/vanadium/nickel waste streams) may have
high profits due to:
1.
Weak suppliers. In the CMR business model the ‘supplier’ is the ‘partner’: it’s a win-win situation. Check in the box.
2.
Weak customers. Huge demand for battery materials drastically weakens the bargaining power of EV battery makers. Again, check in de box.
3.
High entry barriers. You need a patented process to be able to recover those critical materials economically, it’s obvious that not everyone can do this. Check in the box.
4.
Few opportunities for substitutes. Battery designs change over time. But CMR covers a wide range of materials. From the news release: “a suite of battery metals, along with a significant segment of the growing list of critical metals”. If they only planned to recover cobalt, substitution might be a threat. But this is obviously not the case. So, check in the box.
5.
Little rivalry. It’s not likely that suppliers of battery materials will give discounts on their products to gain market share. Market share is fully determined by their production volume. So, again: check in the box.
SCY has
the right kind of intangible assets (IP) to enter a very,
very attractive market with high profits: the supply of battery materials. And that puts them in very favorable spot. Attractive to shareholders and
majors that are looking to diversify into critical metals.
And how about the EV and battery makers? To secure their future supply of materials they may want to own a company like SCY (this is called backward integration). Think about it for a while; SCY with their nice Sc in LIBs patents... Are we talking here a potential bidding war?