EV metal suppliers jump as Biden is expected to invoke the Defense Production Act to ramp up US production

• The Biden administration is expected to invoked the Defense Production Act to aid production of metals used in batteries, including those for EVs.
• Shares of Lithium Americas, MP Materials, and other key metal makers surged Wednesday.

Shares of key metal suppliers surged Wednesday after reports emerged that the Biden administration is set to invoke the Defense Production Act to ramp up US production of battery minerals.

Lithium Americas jumped 14.6%, Piedmont Lithium rallied 7%, while MP Materials and Standard Lithium each added about 6% and Livent gained more than 4%.

The 1950 law was used by Harry Truman during the Korean War for steel production and Donald Trump during the pandemic to boost mask supplies.

Now, Biden is targeting the production of critical materials like lithium, graphite, cobalt, nickel, and manganese, which are used in batteries, including those for electric vehicles.

He could invoke the act as soon as Thursday, allowing producers to access money for current operations as well as productivity and safety upgrades, according to reports.

The Biden administration has been vocal about its intent to develop the US battery supply chain to reduce reliance on China, the world's leading lithium producer. Some see the DPA as a step toward greater energy independence.

Sanctions against Russia, a top producer of key battery metals, have also fueled big price swings. Nickel, in particular, soared in recent weeks since Russia invaded Ukraine. A short-squeeze sent the commodity's price skyrocketing to record highs, forcing the London Metal Exchange halt trading.