Critical battery resource stocks

Lithium charged into news headlines on reports that the US government would seek a 10% equity stake in Vancouver, Canada-based Lithium Americas (). This has sent the stock soaring more than 167% since then. This move, plus others by the US government to help secure critical mineral rights (the latest of which includes a planned 10% stake in Trilogy Metals), has helped multiple mining stocks unearth huge rallies. The S&P/TSX Global Mining Index is currently at a record high.

Here’s how investors might dig into the minerals and rare-earths investment theme.

Government stakes ratchet up minerals race

The Lithium Americas’ deal followed the US government taking a stake in rare-earths miner MP Materials () earlier this year. (The term “rare earth” is a bit misleading, as these minerals are not exactly rare, but are relatively difficult and costly to extract and process.)

The US government’s no-cost warrants stake in Lithium Americas was part of renegotiations for a more than $2 billion loan from the Department of Energy for the lithium miner. The deal centers around its Thacker Pass lithium mine project within the extinct McDermitt Caldera supervolcano in Nevada, which also includes purchase guarantees by General Motors () who acquired a stake in the project in 2024. The deal, which is being reviewed by the Canadian government, involved a 5% stake in Lithium Americas and a 5% stake in the Thacker Pass joint venture. 

Reuters reports that the first phase of the Thacker Pass project, which is set to kick off in 2028, projects to produce 40,000 metric tons of lithium carbonate. That would produce enough byproduct to help construct 800,000 electric vehicles. By comparison, Albemarle’s () Silver Peak project in Nevada—the only lithium mining project in the US right now—produces under 5,000 metric tons per year.

Governments and international companies have been racing to secure rights to lithium and other key minerals that are critical components for electronics, vehicles, wind turbines, and a range of other products. Given that a significant amount of the US supply chain is dependent upon Chinese mineral imports—a US Geological Survey indicated that 70% of US rare-earth imports were supplied by China in recent years—the US has moved aggressively to secure more domestic control of certain mineral resources.

Lithium is among those minerals that have become particularly sought after, largely because of how critical a component it is to battery technology. Other common components of a battery, which can include graphite, aluminum, nickel, and copper, tend to be more readily obtained. While lithium is not a rare-earth metal, it’s not as easily procured as other battery components.

For that reason, some companies that utilize batteries in their supply chain have been investing heavily in battery production—including lithium procurement and refining. For instance, Tesla () spent $1 billion to establish its Texas lithium refinery in 2023.

Lithium prices had been volatile, as the market responded to supply and demand imbalances, export restrictions out of China, and other factors.

One facet of the strategy by the US government has been to create a price floor for certain resources, with the primary purpose of enabling industry to invest for the long term in building out big mining projects for key minerals. For example, in the MP deal, the government set a floor of $110 per kilogram for neodymium-praseodymium oxide, which is a core input in rare-earth magnets.

Lithium stocks

The largest purely lithium miners by market cap are Chinese miners Ganfeng Lithium () and Tianqi Lithium (), Australia-based Pilbara Minerals (), and Lithium Americas ().

Other companies who are not pure-play lithium miners, but do have lithium-mining operations include mining conglomerate Rio Tinto (), North Carolina-based Albemarle (), Chilean-based SQM (), and Australia-based Mineral Resources ().