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Tue, June 6 at 7:00PM ET

Battery Metals Stocks: Why Are MP, LAC, PLL Stocks Up Today?

Today, sources close to President Joe Biden made an important announcement that has battery metals stocks shooting up. As geopolitical tensions disrupt the markets, the U.S. government is planning to invoke a Cold War-era act to spur domestic electric vehicle (EV) battery production. The list of items covered by the 1950 Defense Production Act (DPA) may soon include battery materials like lithium, nickel, cobalt and more.

An image of a neon EV battery
Source: Illus_man/Shutterstock

All told, it has been an excellent month for most battery metals stocks. What’s more, Bloomberg reports that, under the DPA, the companies that mine these metals in the U.S. could “access $750 million under the policy’s Title III fund.”

Now, battery metals stocks are rising in anticipation of an invoked DPA. Piedmont Lithium (NASDAQ:PLL) and MP Materials (NYSE:MP) closed the day up 2% and 3%, respectively, continuing to rise in aftermarket trading. Meanwhile, Lithium Americas (NYSE:LAC) closed on a gain of nearly 12%.

What’s Happening with Battery Metals Stocks?

Last year, the EV boom brought a new focus on battery metals. Since then, geopolitical turbulence has threatened the markets. U.S. leaders have also made it clear that EV adaption will be a fundamental component to energy independence. However, one of the primary concerns in regard to EV production has been obtaining battery materials. Sanctions on Russian metal exports like nickel have only exacerbated these fears.

Battery metals stocks have been rising ever since Russia began invading Ukraine. Now, though, the DPA will send them even higher as the directive helps fund production at U.S. facilities. Both MP Materials and Piedmont Lithium have mining operations in the States. Additionally, although Lithium Americas is based in Canada, it runs a mine in Nevada’s Thacker Pass. The Thacker Pass is “the largest known lithium resource in the United States.”

Previously, the DPA has only been invoked in times of crisis. Congress originally passed it in 1950 when the Korean War threatened supplies. Recently, both Biden and former President Donald Trump used it during the pandemic to prevent supply hoarding and accelerate vaccine production, among other things.

Now, Biden’s potential use of the DPA should signal two things for investors. For one, battery metals stocks will keep rising. But the government is also prioritizing the green energy boom. That puts all types of alternative energy stocks in focus.

What It Means

Moving forward, investors should watch closely for further details regarding the Defense Production Act. Adding battery metals to the list of items covered by the act would certainly help spur EV production. It would also alleviate Wall Street concerns surrounding EV stocks. Tesla (NASDAQ:TSLA), Lucid (NASDAQ:LCID) and many other EV peers could rise as a result.

This is an ideal time to be watching battery metals stocks along with other companies with ties to clean energy production. Investors considering a bullish play may be wise to act now before these stocks rocket higher.

On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

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