16 Stocks that are Benefitting from the Inflation Reduction Act
16 Stocks that are Benefitting from the Inflation Reduction Act
The Inflation Reduction Act (IRA) has had a massive impact on the U.S. electric vehicle (EV) market.
Particularly in terms of investment flowing into the space.
According to EDF data, $92.3 billion in investment announcements, representing 56% of all announced electric vehicle investments, have occurred in the 12 months since the passage of the IRA.
And while this is great news for car makers focusing heavily (or exclusively) on EV manufacturing, such Tesla (NASDAQ: TSLA), Ford (NYSE: F), GM (NYSE: GM), and Hyundai (OTCBB: HYMTF), it’s even better news for the mining companies providing the necessary materials to produce these EVs, as well as all the renewable energy technologies that are also being bolstered by billions of dollars from the IRA.
In fact, S&P Global recently published a new report showing how the IRA has impacted the North American metals and minerals market.
Here are some of its key findings …
- Spurred by the IRA, energy transition related US demand for lithium, nickel and cobalt, taken together, will be 23 times higher in 2035 than it was in 2021. For copper, it will be twice as high. This is equivalent to compound annual growth rates of 25% for the three critical minerals and 4% for copper. While the upward trend was established pre-IRA with the increased cost competitiveness of renewable infrastructure and EVs, projections are materially higher post-IRA.
- Copper remains the backbone of the energy transition – what the EIA calls “the cornerstone for all electricity-related technologies.” More than two-thirds of US energy transition-related volumetric demand for the four metals is copper. Post-IRA, US demand for copper from energy transition-related infrastructure and EVs will reach nearly 2.6 million metric tons in 2035. This energy transition-related infrastructure and EVs will reach nearly 2.6 million metric tons in 2035.
- Electric vehicle batteries are the key driver of growth in the post-IRA demand outlook for critical minerals in the United States. Compared to before the IRA, US demand in 2035 is projected to be: Lithium – 15% higher, Cobalt- 13% higher, and Nickel – 14% higher. Demand for copper comes from a wider range of applications including transportation, power generation, and transmission and distribution. Post-IRA USenergy transition demand for copper is projected to 12% higher by 2035 than our pre-IRA outlook.
What’s interesting about this is that in order to be in compliance with sourcing requirements of the IRA, nickel, lithium, cobalt and copper must be produced in the US or FTA countries. (i.e. – countries with which the U.S. has comprehensive free trade agreements. These include:
Australia
Bahrain
Canada
Chile
Colombia
Costa Rica
Dominican Republic
El Salvador
Guatemala
Honduras
Israel
Jordan
Korea
Mexico
Morocco
Nicaragua
Oman
Panama
Peru
Singapore
Japan
This is why we’re focused primarily on EV and renewable energy-related mining stocks that are either operating in the U.S. or FTA countries. These include, but are not limited to …
Albemarle (NYSE: ALB)
SQM (NYSE: SQM)
Pilbara Minerals (OTCBB: PILBF)
Freeport-McMoRan (NYSE: FCX)
Glencore (OTCBB: GLNCY)
Lundin Mining (TSE: LUN)
Southern Copper (NYSE: SCCO)
Rio Tinto (NYSE: RIO)
Newmont Corporation (NYSE: NEM)
BHP Group (NYSE: BHP)
Vale (NYSE: VALE)
Also keep an eye on Stellantis (NYSE: STLA), which just invested $100 million into a California geothermal lithium project.
Bottom line: demand for nickel, cobalt, lithium, and copper produced in the US or FTA countries is going to be off the charts for the next ten years. And if you play your cards right, you can make a boatload of cash in the process.
Briton Ryle
Chief Investment Strategist
Pro Trader Today
brit.ryle@protradertoday.com
Facebook: https://www.facebook.com/ProTraderToday
Twitter: https://twitter.com/BritonRyle
