Dusseldorf, Zurich The German-Canadian company Rock Tech Lithium wants to build more factories in Germany than previously known. The listed company wants to set up two of the five production sites planned in Europe in this country, as the Handelsblatt learned in advance. So far only one location in Brandenburg Guben was known.
The company has also appointed a new CEO: Markus Brügmann, 53, succeeds Dirk Harbecke. After the departure of Simon Bodensteiner last year, he had temporarily led Rock Tech as CEO and head of the supervisory board.
Harbecke now wants to concentrate on his role as chief controller again. “With Markus Brügmann, we have definitely brought the necessary expertise in-house,” says Harbecke in an interview with the Handelsblatt.
Brügmann himself has worked for industrial groups such as Mitsubishi Power and ABB for many years. “I didn’t think twice about this offer,” says the engineer about the new position. At Mitsubishi he gained experience in the development and construction of large power plants. He will also need them in the years to come.
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Rock Tech wants to supply the European car industry with the necessary lithium for the production of electric cars. The coveted raw material is to be mined in Canada, while processing is to take place in Europe. From 2024, Rock Tech wants to process around 24,000 tons of lithium per year in Brandenburg – enough to build 500,000 electric cars.
Will Rock Tech secure its first customers soon?
In a so-called converter, the extracted lithium is converted into lithium hydroxide, which is required for the production of electric car batteries. The industrial service provider Bilfinger is to build the appropriate systems. Both companies have signed a letter of intent for this.
Rock Tech has big plans, but so far neither a permit for the construction of the planned mine in Canada nor for the converter in Brandenburg. And there are still no buyers. However, the ambitious company urgently needs them.
For the construction of the first plant near Berlin alone, Rock Tech expects an investment volume of almost half a billion euros. Accordingly, around 2.5 billion are needed for all five converters. “The approval procedures are underway, the plans are in place and the locations are secured. And we will be able to announce our first purchase agreement this year,” says Harbecke.
Brügmann has been the new CEO of the German-Candian company since mid-January.
The former stock market journalist joined Rock Tech in 2010. However, the company was founded in 1996 – at that time under a different name and with a focus on gold. Hardly anything has happened for years. It wasn’t until 2015 that the focus shifted from gold to lithium and the plan to build the mine in Canada began to be drawn up. In 2019, the management decided to start processing the raw material at the same time.
The prospect of lithium hydroxide production in Germany and subsidies in the millions has triggered euphoria among investors. No wonder: the announcements by the major car manufacturers of their electric strategies are causing the demand for lithium to increase rapidly.
The price of the alkali metal has been on a high for the past 12 months. According to industry information service S&P Global Platts, one of the most important reference prices, battery-grade lithium carbonate in the Chinese market, is currently trading at the equivalent of around $47,500 per tonne. In the first two weeks of the year alone, prices went up by 35 percent. Over a one-year period, the price increase is more than 500 percent.
Stock market price weakened recently – despite rising prices
The market value of Rock Tech Lithium had shot up from eight million euros in March 2020 to 380 million euros in the meantime. Since then, however, the price has weakened somewhat: the company is currently valued at almost 260 million euros.
However, a fund manager who has looked at Rock-Tech stock but declined to be named thinks the stock is “too expensive.” The rating is high compared to what the company has been able to show so far.
It is difficult for a young company to set up a capital-intensive industrial plant such as a lithium converter. In addition, the operation of a mine and a chemical plant are two very different business areas that cannot easily be combined under one roof.
Chairman of the Supervisory Board Harbecke rejects the criticism: “I believe that we were significantly undervalued in 2020 and still are,” he says. After all, at the current lithium price, a high profit is guaranteed. But only if mine and converter can be built in time. The fact that everything does not always go according to plan, especially in Germany, is impressively demonstrated by the construction of Tesla’s planned gigafactory in Brandenburg. Production should actually be running here by the end of 2021.
Industry insiders are also watching the Rock Tech announcements with skepticism. “The schedules are far too ambitious,” they say. If it works, Rock Tech has its right to exist, until then the company is “just a project for shareholders”.
The fund manager assumes that German small investors in particular have invested in the value. Many grabbed it when it became known that Facebook investor Peter Thiel and German billionaire Christian Angermayer were investing with his investment company Apeiron. Both are said to have been on board again in the most recent capital increase of almost 41 million dollars in December. Apeiron and Harbecke are the largest shareholders in the company, each with 13 percent.
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