Why Lithium Americas Is Up 8% Today

What happened

Shares of Lithium Americas (NYSE:LAC) were up 8% as of midday Monday, in response to a ruling that the mining outfit can move forward with plans to excavate its Thacker Pass site in Nevada.

So what

Just as the name suggests, Lithium Americas is a key producer of lithium, the key component of batteries used to power electric vehicles. The industry continues to expand, with worldwide sales of electrified automobiles growing 41% last year even with the pandemic in place, according to numbers from the International Energy Agency.

This ongoing growth is of course spurring new demand for lithium. In fact, Fitch Solutions estimates lithium production will triple between 2020 and 2030.

Loader dumping minerals into a dump truck at a mining site.

Image source: Getty Images.

Mere demand hasn’t necessarily meant minerals miners can simply scale up production, though. Regulators are moving slower than the industry itself is, and in the case of Lithium Americas’ Thacker Pass project — the United States’ biggest lithium resource — environmental concerns as well as the possibility that valuable Native American artifacts may be buried at the site presented a temporary impasse.

Miranda Du, Chief Judge of the federal court in Reno, Nevada, ruled on Friday that at least the excavation for those Native American relics can proceed.

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Now what

It seems like a firm victory for Lithium Americas, and by most measures, it is a measurable win. While Du has yet to make a decision about the project’s environmental impact, her written statement notes the environment protectionist “failed to meet their burden to show they will be irreparably harmed.”

The size of today’s 8% swing, however, is also part of a larger pattern of volatility (bullish as well as bearish) more than a marker of a new rally. Given the stock’s likely near-term volatility, today’s jump in itself isn’t a reason to step in.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/07/26/why-lithium-americas-is-up-8-today/

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