ASX 200 lithium shares could be winners as Biden calls critical clean energy metals the 'third pillar of the Australia-US alliance'

ASX 200 lithium shares are well-positioned amid the US push to diversify the West's critical metal supplies away from China.

| More on:
a business person checks his mobile phone outside a Wall Street office with an American flag and other business people in the background.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • ASX 200 lithium shares have helped Australia lead the world in lithium production
  • US President Joe Biden is seeking to have Australia added as a "domestic source" of critical metals
  • Biden labelled clean energy as "the third pillar of the Australia-US alliance"

S&P/ASX 200 Index (ASX: XJO) lithium shares have enjoyed a strong rebound since lithium prices bottomed on 24 April.

Lithium stocks, big and small, came under pressure late in November when prices began to nosedive from all-time highs, tumbling more than 70% before finding support.

Prices for the battery-critical metal have since leapt around 25%, helping lift the fortunes of the lithium miners.

And most of the top lithium miners have continued to outperform over the past month.

Here's how these five leading ASX 200 lithium shares have performed since 24 April (as at market close on Friday):

  • Pilbara Minerals Ltd (ASX: PLS) shares are 18%
  • Core Lithium Ltd (ASX: CXO) shares are up 15%
  • Allkem Ltd (ASX: AKE) shares are up 33%
  • IGO Ltd (ASX: IGO) shares are up 7%
  • Liontown Resources Ltd (ASX: LTR) shares are up 3%

In early morning trade today, all of the above ASX 200 lithium shares are in the red.

Yet despite this morning's slip, the medium and longer-term outlook for the critical metal miners got another healthy boost over the weekend, courtesy of United States President Joe Biden.

How might the US help lift ASX 200 lithium shares?

On Saturday, Biden attended the Quadrilateral Security Dialogue (Quad) summit in Hiroshima.

Following on the heels of the G7 summit earlier in the day, Biden met with prime minister Anthony Albanese to discuss a range of issues. These included the need for Western nations to diversify their supply chains of critical clean energy metals.

This is encompassed under the Australia-US Climate, Critical Minerals and Clean Energy Transformation Compact, which runs parallel with the US$369 billion (AU$555 billion) Inflation Reduction Act (IRA).

In a sound bite that should pique the interest of investors in ASX 200 lithium shares, Biden said (quoted by The Australian Financial Review):

We are going to establish climate and energy as the third pillar of the Australia-US alliance. This will enable the expansion and diversification of clean energy supply chains, especially as it relates to critical materials.

Together, the leaders added that Biden will seek to have Australia added as a "domestic source" under the US Defense Production Act. Atop other potential advantages for ASX 200 lithium shares, this would open the door to new US investments in their projects.

Why is Biden eager to tap into Australia's critical minerals?

China has long dominated the supply chain of a range of metals crucial for technology and the world's push towards electrification, such as rare earth elements and lithium, which has potential national security ramifications.

And ASX 200 lithium shares look to be among the beneficiaries of the US push to diminish China's dominance.

While Australia has the fifth-largest lithium reserves on the planet, it is currently the world's biggest lithium producer.

And while there are sure to be numerous ups and downs along the way, that leaves ASX 200 lithium shares well-positioned to take advantage over the medium and longer term of this new "third pillar" of Australia's alliance with the world's top economy.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Resources Shares

'I hate what I have done': Mineral Resources share price down as Ellison laments actions

Managing Director Chris Ellison says he deeply regrets the impact of his 'error of judgement'.

Read more »

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Materials Shares

Why is this ASX lithium stock jumping to a 52-week high today?

This lithium stock is smashing the market this year despite all the doom and gloom in the industry.

Read more »

Projection of two hands being shaken on a deal.
Materials Shares

Sayona Mining shares sink 13% on Piedmont Lithium merger news and capital raise

This merger will create the largest lithium producer in North America.

Read more »

Miner looking at a tablet.
Materials Shares

Down 28% in 2024, why this ASX 200 lithium stock could now be 'deeply undervalued'

The ASX 200 lithium stock has drawn plenty of investor attention over the past month.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Materials Shares

Buy BHP shares for a 20%+ return

Goldman Sachs expects big total returns from this mining giant.

Read more »

Miner looking at a tablet.
Materials Shares

Here's why ASX uranium shares are ripping higher today

Uranium shares are smashing the markets today.

Read more »

A female broker in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains which two ASX 200 shares should do well in today's volatile climate
Materials Shares

2 ASX 200 lithium stocks to buy for big returns

Which stocks are analysts tipping as buys right now? Let's find out.

Read more »

Young businesswoman sitting in kitchen and working on laptop.
Materials Shares

Is Mineral Resources stock a good buy right now?

This mining share is trading close to multi-year lows. Is this a buying opportunity? Let's find out.

Read more »