In late December, President Donald Trump signed an executive order directing the relevant federal agencies to develop a strategy to reduce the United States' reliance on foreign sources of "critical minerals" that are used to make products deemed essential to our country's economic and national security. Lithium was named as one such mineral, as it's crucial for producing the lithium-ion batteries that power electric vehicles (EVs), consumer electronic gadgets, and energy-storage products.
Investors should be aware of this under-reported move since it could have ramifications in the lithium space, which has been white-hot since 2016, though lithium stocks have pulled back in 2018.
It's too soon to say which lithium companies could benefit, though possibilities include the world's largest lithium producer, North Carolina-based Albemarle (NYSE: ALB), which has a lithium mining operation in this country, and one or more of the junior miners, such as Lithium Americas (NYSE: LAC), that are exploring the viability of mining lithium in the U.S.
Here's what you should know.
A lithium brine mining operation: Lithium-containing brine is pumped from reservoirs that lay beneath ancient lake beds into huge above-ground evaporation ponds, which yields a concentrate that will be processed into lithium carbonate, lithium hydroxide, and various downstream lithium products. Image source: Getty Images.
"A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals"
The Republican president's executive order No. 13817 aims to encourage domestic production of critical minerals in order to reduce our country's reliance on foreign sources, which "creates a strategic vulnerability" for both our "economy and military to adverse foreign government action, natural disaster, and other events that can disrupt supply of these key minerals." The impetus for the directive was a report by the U.S. Geological Survey that concludes that foreign sources provide at least 50% of our total needs for 21 out of 23 critical minerals, including lithium. Moreover, it spells out just how dependent we are on the Chinese to supply many of these minerals.
The Motley Fool