Here's Why Albemarle Stock Rose 5% To Lead the S&P 500 on Monday

Updated November 11, 2024

Source: Bloomberg / Contributor / Getty Images

Albemarle (ALB), the world’s largest lithium producer, saw its stock climb 5% on Monday, making it the top performer in the S&P 500. This surge came after the U.S. government approved a significant lithium mining project in Nevada—the first lithium mine to receive approval under the Biden administration.

Although the project was approved for another lithium producer, Australia’s Ioneer (IONR), which received federal permission for its Rhyolite Ridge lithium-boron mine, Albemarle’s stock benefited from the news. Ioneer’s American depositary receipts (ADRs) also rose more than 7% on Monday.

U.S. Push to Compete with China in EV Mineral Supply Chain

The approval of the Rhyolite Ridge project signals progress in the U.S. efforts to reduce its reliance on China for critical minerals used in electric vehicle (EV) batteries. Currently, China controls more than two-thirds of the global lithium refining capacity.

Tax Credit to Boost Domestic Mining

Along with the approval, the U.S. government introduced measures to incentivize domestic lithium production. The Treasury Department announced that a 10% production tax credit for U.S.-made products will now extend to raw materials and extraction costs, provided some processing of the material occurs. Previously, these credits were limited to battery manufacturing, excluding raw lithium miners.

Analysts see this tax credit extension as a crucial step in building a U.S.-based EV battery supply chain and reducing dependence on Chinese imports.

Implications for Albemarle

Albemarle's Silver Peak mine in Nevada is currently the only lithium operation in the U.S. In addition to Ioneer’s newly approved Rhyolite Ridge mine, Lithium Americas (LAC) is also developing a project at Thacker Pass, supported by General Motors (GM).

While the additional tax credits and investments bode well for U.S.-based lithium mining companies like Albemarle, soft lithium prices and uncertain EV demand have weighed on the company’s stock. Despite Monday’s gains, Albemarle shares are down approximately 32% year-to-date.