What happened
The Dow Jones Industrial Average and S&P 500 are losing ground today, but shares of The Metals Company (TMC -3.61%) are soaring in the other direction. No, the company hasn't reported any news that is driving the stock higher. Instead, it seems that speculation is growing that President Biden is weighing whether or not he should invoke the Defense Production Act, and investors in the seabed mining company are taking notice.
As of 2:02 p.m. ET, shares of The Metals Company have soared 24%.
So what
Citing "a person familiar with his plans," The Wall Street Journal is reporting today that President Biden is contemplating the invocation of the Defense Production Act to spur production of minerals that are used in the batteries of electric vehicles (EV).
Image source: Getty Images.
Naturally, upon hearing this news, investors look toward U.S. companies that specialize in the production of minerals used in EV batteries such as lithium, cobalt, manganese, and nickel. The Metals Company falls squarely into this category since it owns what it characterizes as the "largest undeveloped nickel project in the world." But it's not only nickel that The Metals Company is focused on collecting from polymetallic nodules on the seafloor; the company also plans to produce manganese, copper, and cobalt. In fact, The Metals Company estimates that it owns mineral resources with the potential to be used in 280 million EVs.
Now what
Should President Biden end up invoking the Defense Production Act, it should be a tailwind for the company, but it's important to recognize that it will be some time before the company commences mineral-production operations. The rapid rise in The Metals Company's stock today seems a little overdone, but for patient growth investors, however, The Metals Company is an EV-related stock that's worth following.
