Volkswagen Bets on Radical Vertical Integration
Volkswagen is responding to market pressure with far-reaching measures. The group founded PowerCo SE, a wholly owned battery subsidiary intended to control the entire chain from the mine to the battery cell. The project’s technological foundation is a standardized prismatic unit cell, which is expected to cover around 80% of the vehicle portfolio in the future. When it comes to the actual extraction of raw materials, PowerCo is acquiring direct minority stakes. For example, the company invested USD 48 million in the Canadian explorer Patriot Battery Metals, coupled with a binding, ten-year offtake agreement for 100,000 metric tonnes of spodumene concentrate annually from the Shaakichiuwaanaan project in the Canadian province of Québec. For refining, PowerCo founded the joint venture IONWAY together with the commodities group Umicore. The goal: to produce cathode materials in Nysa, Poland. Through additional partnerships, such as the licensing agreement with QuantumScape, VW is also positioning itself for the mass production of future battery technologies.
Mercedes-Benz: Partner-Based Offtake Model in a Strategic Network
Mercedes-Benz prefers a more decentralized, partner-focused procurement model and deliberately avoids direct investments in mines. As part of its “Ambition 2039” sustainability strategy, the Group is entering into offtake agreements with specialized refining partners. Mercedes-Benz has outsourced cell production to the European joint venture Automotive Cells Company (ACC), in which the company now holds a 30% stake. To supply this network, Mercedes-Benz relies on the “local-for-local principle” and enters into direct supply contracts with midstream players such as Vulcan Energy Resources and Rock Tech Lithium.
Rock Tech Lithium Makes Technological Advances
The Canadian-German company Rock Tech Lithium focuses on the Georgia Lake hard-rock lithium project in Canada’s Thunder Bay District. Under the name “The Integrated Play,” Rock Tech is establishing a regional value chain—according to the preliminary feasibility study from 2022—to produce approximately 100,000 metric tonnes of high-grade spodumene concentrate annually. To further improve profitability, Rock Tech is implementing sensor-based ore sorting in cooperation with industry and research partners. This technology is expected to filter out 25 to 45% of the low-grade rock prior to grinding, thereby increasing the grade in the concentrator by a factor of 1.4 to 1.8. This is expected to significantly reduce the project’s capital costs. At the same time, Rock Tech also sees further potential in reducing operating costs. The produced material will then be processed into lithium carbonate equivalent (LCE) at the Red Rock Converter, located 70 km away. The Canadian site already has a co-investor in the BMI Group, which has contributed CAD 200 million.
The Guben Converter and the Strategic Risk Radar
While the Canadian operations are progressing rapidly thanks to the Canada Strong Fund and the low energy costs there, the European project has stalled so far despite the partnership with Mercedes-Benz. The converter planned for Guben, Brandenburg, which already has a permit for 24,000 metric tonnes of battery-grade lithium hydroxide per year, has not made much headway in the public eye in recent years. Private investors have also been hesitant. However, there are now signs that Rock Tech Lithium may be able to drive down costs in Guben as well, thanks to technological innovations. Once the project in Canada gets underway, the converter in Brandenburg is also likely to benefit from the new insights.
Analysts Are Optimistic About Rock Tech
In their latest report, analysts at First Berlin continue to rate Rock Tech Lithium’s stock a clear “Buy.” According to market experts, the stock’s upside potential is based on its fully permitted infrastructure in Europe, its CRMA status, and its advanced mining project in Canada. From this, analysts derive a price target of CAD 3.90. The current share price trades at less than one quarter of that level. This valuation gap could represent a major opportunity for speculative investors. Lithium is essential for the European automotive industry—batteries of the future will continue to rely on it. The so-called “white gold” has long been making a comeback. With its more mature business model, Rock Tech Lithium is well positioned to benefit from this trend. After a prolonged sell-off, the stock may now be becoming interesting again.
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