Biden’s push toward electric vehicles as he looks to invoke the Defence Production Act

US President Joe Biden is pushing to invoke the Defence Production Act as soon as the end of the week. The president is aiming to boost domestic production of critical minerals which are essential to the production of Electric Vehicle (EV) batteries and military hardware.

The legislation was originally designed to help the federal government gain more control of the critical materials during the cold war. It allows the president to respond to a national emergency by requiring companies to prioritise federal contracts for whatever good or materials it deems necessary. The legislation is now being utilised to support the growth of EV’s and support the President’s vision to have 50% of all new cars purchased as electric vehicles by 2030. The support given will not just apply to American companies, it will also extend to Australian companies both operating with in North America and within Australia.

The funding provided will help many mining companies access feasibility studies, production facilities and other supportive equipment. The minerals included in the act include Lithium, Nickel, Graphite, Cobalt, Manganese and Rare Earths. Reports state that mining companies will be able to access up to 750 Million dollars in funding to support their projects.

Foreign domination of the procurement and production of these precious materials has caused many challenges to Western Nations as they have progressed towards Net Zero and advanced their security interests. Specifically, China has dominated the production of many of these materials. The supply chain issues were highlighted during the recent conflict in Russia and the Ukraine. Russia produces 20% of the world’s nickel and at the start of the crisis and a huge rise in the caused a panic as the price grew exponentially over a couple of days.

This enactment of the act will likely push the prices of critical material producers higher. ASX200 Companies such as LYC, ILU, AKE, MIN and PLS may all gain a boost from the enactment of the legislation. Similarly mining and battery stocks in the USA stocks such as TSLA, ALB and may also a lift in their share prices.