Wanna Play $TSLA but no Money? $VALE TLDR: $ submitted by
TSLA is likely partnering with $VALE to produce the insane quantity of Nickel needed to make Tesla’s vehicles, this is almost certainly happening for the following reasons… READ FULL BEST DD ON WSB
>>>TESLA NEEDS NICKEL<<<
- $VALE is the largest nickel producer in the entire world, with Tesla constantly calling for more Nickel production the partnership potential for these two companies is a match made in heaven.
- $VALE notified creditors on September 14th that it was paying off it’s $5 billion debt, suggesting a large deal leveling them an insane amount of capital.
- $VALE’s trading volume is up 37% from it’s average and has bullish whale activity in the options chain.
- Earlier this month, $VALE announced that they would be paying an extra dividend, on top of their regularly scheduled dividend, reinforcing the thesis of a strong balance sheet
- Tesla and $VALE already have a history of being bidirectional business partners for over a year.
- Conservative estimates reveal Tesla's growth plan leaves $VALE’s competitors ill equipped to deal with the demand for nickel Tesla needs to produce it's vehicles within five years.
If there is one to take away from this post, it is the fact that Tesla vehicles need nickel and insane quantities of it. No one is better equipped to supply nickel to Tesla than $VALE. During Tesla’s Q2 earnings call, Elon painstakingly
laid out how badly they were looking for a nickel producer.
“Well, I’d just like to re-emphasize, any mining companies out there, please mine more nickel. Okay. Wherever you are in the world, please mine more nickel and don’t wait for nickel to go back to some long — some high point that you experienced some five years ago, whatever. Go for efficiency, obviously environmentally-friendly nickel mining at high volume. Tesla will give you a giant contract for a long period of time, if you mine nickel efficiently and in an environmentally-sensitive way. So hopefully this message goes out to all mining companies. Please get nickel.” >>>THE STARS ALIGNED<<<
The following points are largely circumstantial evidence, however when stacked together create an extremely powerful narrative and points toward the extreme likelihood of $VALE actually having lined up a revolutionary
deal with Tesla. Quotes from Tesla Q2 2020 Earnings Call
“There’s so much to be excited about. It’s really hard to kind of fit into this call, but the sheer amount of hardcore engineering, especially on the autonomy and the manufacturing/engineering front is mind-blowing. And then of course there’s Battery Day, which is coming up pretty soon. And I think that’s really going to surprise people by just how much there is to see.”-Elon Musk
“Yeah. The real limitation on Tesla growth is cell production at affordable price. That’s the real limit. So that’s where — we’re going to talk about — a lot more about this on Battery Day because this is a fundamental scaling constraint. And any part of that supply chain or processing at the cell level will be a limiting factor. So whatever it may be, anywhere from mining to refining — there’s many steps from refining to cathode and anode, cell formation. Whatever the choke point is, that will set the growth rate. And so we expect to expand our business with Panasonic, with CATL, with LG, possibly with others, and there’s a lot more to say on that front on Battery Day.”-Elon Musk
“Well, I’d just like to re-emphasize, any mining companies out there, please mine more nickel. Okay. Wherever you are in the world, please mine more nickel and don’t wait for nickel to go back to some long — some high point that you experienced some five years ago, whatever. Go for efficiency, obviously environmentally-friendly nickel mining at high volume. Tesla will give you a giant contract for a long period of time
, if you mine nickel efficiently and in an environmentally-sensitive way. So hopefully this message goes out to all mining companies. Please get nickel.”-Elon Musk
“Like the thing that bugs me the most about where we are right now is that our cars are not affordable enough. We need to fix that. So we’re all making progress in that regard, just sort of steadily gaining progress. So yeah, we need to not go bankrupt, obviously. That’s important, because then we’ll fail in our mission. But we’re not trying to be super profitable either, obviously, profitability is like 1% or something, just 1% or 2%. It’s not crazy. Last quarter, it was only like 0.1%. So we want to be profitable. Like I think just we want to be like slightly profitable and maximize growth, and make the cars as affordable as possible, and that’s what we’re trying to achieve.”-Elon Musk
Battery Breakdown Battery Breakdown Philippe Houchois — Jefferies — Analyst
“Yes, good afternoon. Thank you. You mentioned a few times about the constraint to growth is battery capacity still. And I was hoping you could clarify the scope of the Berlin plant you’re building right now. Will there be — the battery capacity consistent with the amount of assembly volume you expect to come out of Berlin? And if not, will you be able to source your battery requirements out of Europe? Will you have to import batteries from outside Europe to ensure production in Berlin?
Elon Musk — Chief Executive Officer
Okay. We can’t say too much about this, except that there will be local cell production, and that will serve the needs of the Berlin factory. Drew, is there anything…?”(TeslaRati
by Joey Klender) $VALE mines
nickel in Brazil, Canada, Indonesia and New Caledonia making it the LARGEST
producer of nickel. VALE has joint-venture refineries in China, South Korea, Japan, the UK and Taiwan. These locations will help deliver nickel to the Tesla factories in North America, Berlin and China. Future Nickel Demand According To Tesla CEO Elon Musk, This Metal is The New Gold
The demand and future of nickel will continue to grow for the foreseeable future. Electric vehicles and other modern technology NEED nickel to function.
“With demand expected to increase from 2.2 million metric tons to somewhere in the range of 3.5 million to 4.0 million metric tons by 2030, the nickel market could become constrained.”-McKinsey and Company By Marcelo Azevedo, Nicolas Goffaux, and Ken Hoffman
Nickel Demand Nickel Demand Elon Musk’s Emphasis on “Environmentally Friendly”
During the call and clip that was hyperlinked above, Elon emphasizes the demand for an “environmentally friendly” mine. Historically, we all know mines have run into trouble with being friendly toward the environment. Today more than ever, a company's concern for the environment must be vocally expressed and physically acknowledged. If not, the reporters and media will bash Tesla for not being environmentally sensitive. Elon Musk understands this and is aware that the nickel company Tesla chooses must at least appear as if they are environmentally “sensitive". Vale’s website has information on how they are sustainable
of the controversies surrounding the mining industry.
“Given Tesla’s focus on sustainability, the company is likely to prefer to buy from miners of higher-grade nickel sulphide, which requires less power to process than laterite ore, said Lachlan Shaw of National Australia Bank.”-Reuters, Yilei Sun, Melanie Burton“There are three key suppliers - Brazil's Vale VALE3.SA, which operates in Canada using some hydropower, Russia's Norilsk Nickel GMKN.MM and BHP Group's operations BHP.AX in Western Australia. "Vale is in the box seat,"
he said.”-Reuters, Yilei Sun, Melanie Burton
Just the appearance and attempt to be environmental is enough to scare away most journalists who are looking to make a hit piece on Tesla. To wrap it up, Vale has the efficient, sustainable, and environmental mining that Elon Musk is looking for.
Stock Fundamentals and Technicals
$VALE Average Volume: 27,756,238
9/15/2020 volume: 44,035,430
This is a 37% increase in Volume compared to the average volume.
Current P/E of 50.53, Forward P/E of 5.22
Annual Yield 6.06% Ex date 9/22/2020 Pay date 10/07/2020
Extra Dividend of 1.63% Ex date 9/22/2020 Pay date 10/07/2020 Hedge Funds who own $VALE
Bill Ackman: Pershing Square Capital Management
Carl Icahn: Icahn Carl C
Warren Buffet: Berkshire Hathaway/Dividend Stock Portfolio
George Soros: Soros Fund Management
Laurence D. Fink: Blackrock Inc.
“A study of analyst recommendations at the major brokerages shows that Vale SA (NYSE:VALE
) is the #11 broker analyst pick, on average, out of the 50 stocks making up the Metals Channel Global Mining Titans Index
, according to Metals Channel
. The Metals Channel Global Mining Titans Index is comprised of the top fifty global leaders from the metals and mining sector.” (Metals channel staff
) Whale Activity
FlowAlgo of VALE and Volume/OI below in the green box
Volume and Open interest on far right
***Technicals:*** Monthly signals: Buy
MA(5) Buy Buy
9 buys 3 sells
CCI(14)Neutral Weekly Signals: Strong Buy
MA(5) Buy Buy
12 buy 0 sell
RSI(14) Buy (60.683)
CCI(14)Buy Daily Signals: Strong Buy
MA(5) Buy Buy
12 buy 0 sell
RSI(14) Buy (58.562)
News Doesn't Care About Technical Analysis
No matter how good the TA setup is for $VALE, news does not give a FUCK about TA. If it has a catalyst to moon... moon it will. Cash Flow
The increasing and regular cash flow has built a very strong balance sheet for VALE and the consistent high yield will keep the loyal investors around. In addition to this year's regular dividend, $VALE is paying investors an extra dividend of 1.63% on the same day as the regular. According to research firms such as CFRA, the management team has been very active and engaged to keep the company moving in the right direction despite COVID-19 setbacks and a decrease in steel demand.
Balance Sheet Competition
$HNCKF (Giga Metals corp) a competing mining company fell
18.84% today after being in the news about potentially
being a candidate for Tesla’s nickel demand. Currently, at a conservative rate, Giga’s mine would stop being able to satisfy Tesla’s Nickel needs by 2025, assuming they would be able to begin mining operations immediately. On the other hand, yesterday (Sept. 16), Vale announced that they had created buffers to reach production of 400 million metric tons of total mineral mining per year in a filing that was part of an investor tour presentation. Nickel is one of the five metals Vale mines.
Competition I'll scratch your back if you scratch mine
Tesla and Vale already have a bidirectional relationship that GM and NKLA could never even dream of. Tesla and Vale have a history of working together. In March, “Antonin Beurrier, CEO of Vale-NC and Elon Musk, CEO of Tesla, signed a contract, an offtake agreement for the delivery of intermediate mixed nickel and refined cobalt (Nickel Hydroxide Cake-NHC) produced in New Caledonia. The product will become part of Tesla’s battery composition. The purchased volume remains confidential.”-Tesmanian by Eva Fox
(original french source
). Tesla and Vale have already signed a confidential contract in regards to Tesla’s battery composition materials needed.
In 2019, Tesla hired an Engineer from Vale-NC to “facilitate procurement and familiarization with the products of the Caledonian plant”
"Tesla has recruited an engineer in a nickel-cobalt refinery in New Caledonia, that of Vale, in order to facilitate purchases for its large European electric vehicle factory in Berlin." Vale using Tesla’s Lithium batteries at Guaiba iron ore port
“Iron ore miner Vale is installing a Tesla battery energy storage system at Ilha Guaiba terminal in Rio de Janeiro state to help meet power needs at the port as it moves toward energy saving technology.”-London
The project will substitute 20% of the facility's power costs using Tesla manufactured lithium-ion batteries with technology contributing to decarbonization plans, Vale said in an Aug. 24 statement.”-London Tesla’s technology is being used to lower costs at Vale’s iron ore
and to contribute to the “decarbonization plans”. If you remember in the Q2 conference call, Elon Musk was searching for environmental and efficient
nickel. Vale has that now thanks to Tesla's battery technology. More Vale environmentalism
‘Vale recently announced investments of over $2 billion to reduce direct and indirect carbon dioxide emissions by 33% until 2030, in accordance with the Paris Agreement. Vale said it intends to become carbon neutral by 2050.”
"As Vale continues to decarbonize its operations, the use of batteries will become an increasingly important part of the electrification of our fleet," Vale's energy director Ricardo Mendes said in the statement.
"This project allows us to test new technology in the field and accelerate Vale's energy transformation, which aims to achieve self-sufficiency by increasing electric power generation mainly through solar and wind sources in addition to our hydroelectric power generation,"-London
has a large nickel mine in Indonesia, $VALE Pricing and Math
After calculating a very conservative estimate of how much nickel Tesla would be needing in the future, these were the results… (see figure below)
With a conservative
estimate of a $43 billion dollar contract, $43 billion minus the operating margin (38%)= $16.5 billion. This gives the stock 28% upside. The price target for $VALE is $15.36
with a 5% variance giving a low at $14.80 and a high of $16.00 Not to mention the stock market acts very irrational in times of hype, the stock could very well overreact to $20+CFRA’s current 12 month price target for VALE is $15.00, whom most likely have not anticipated Tesla news. (If they get the news, this thing will FLY based on what we have seen this year)
Elon Musk stated
that Tesla “will give you a giant
contract for a long period of time
Conservative nickel projections
This is not taking into account that the price of nickel is lagging in comparison to its current and future demand. Current nickel price as of 9/16/20: $15,229.50 per ton
Nickel Price: $15,229.50 per ton
Once the demand for nickel goes up and the supply grows scarce, that's easy economics theory, nickel price goes up. The Plot Thickens
Put on your tinfoil hats for this one…
Elon Musk has a history of hiding stuff in his tweets.
We remember this one. He had called out that Tesla stock was too high at a pre split price of $750
- The timestamp 8:11 signaled calendar date 8/11
- The date of posting May 1st turned into 5/1
- “Tesla stock price is too high imo” signaled that a stock split was imminent
What happened, on 8/11 Tesla announced a 5/1 stock split
Elon Musk has had a rough history with the SEC whom he outspokenly does not respect. This tweet was deciphered to read “Suck Elon’s Cock”
The Tesla short shorts represented the current Tesla models,
- Model S
- Model 3
- Model X
- Model Y
Elon expressing his lack of respect for the SEC and nobody is perfect
Reporter: “But how do they know if it is going to move the market if they are not reading all of them?”
Elon Musk: “I guess we might make some mistakes, who knows?”
Reporter: “Are you serious?”
Elon Musk: “Nobody's perfect” Now let’s break down the battery day tweet
- The tweet was tweeted on the same day as $VALE’s dividend announcement (9/11)
- Battery day is on the same day $VALE’s ex date for the regular and extra dividend (9/22)
- “Many exciting things will be unveiled on Battery Day”
ed = VEIL = $VALE
I rest my case Positions
VALE 9/25 $12.00c
VALE 9/25 $13.00c
VALE 1/15/2021 $12.00c
EDIT: formatting, GIGA Metals is down 11%
EDIT 2: I'm not fucking selling. Either we moon to Valehalla or the captain goes down with his ship. disclaimer: none of this is financial advice, this is for educational and entertainment purposes only. nothing in this post should be construed as financial advice or a recommendation to buy or sell any sort of security or investment.