S&P/ASX 200 Index (ASX: XJO) lithium shares are well-placed to potentially benefit from the developments at the recent G7 summit.
Among other global issues addressed at the summit, held in Hiroshima Japan, world leaders focused on diversifying Western supply chains of critical clean energy metals away from China's dominance in the field.
With Australia's close ties to the United States and its status as the world's top lithium producer, that could be good news for lithium stocks of all sizes.
As for which ASX 200 lithium share could be "ideally placed" to take advantage of the developments, we'll get to that shortly.
First…
Image source: Getty Images
What happened at the G7?
In a potential future boon for ASX 200 lithium shares, US President Joe Biden and Prime Minister Anthony Albanese announced a new Climate, Critical Minerals and Clean Energy Transformation Compact.
The pact runs alongside the US$369 billion (AU$555 billion) Inflation Reduction Act, which contains billions of dollars for sustainable energy development.
"We are going to establish climate and energy as the third pillar of the Australia-US alliance," Biden said at the summit. "This will enable the expansion and diversification of clean energy supply chains, especially as it relates to critical materials."
Biden also aims for Australia to join Canada as a recognised "domestic source" under the US Defense Production Act. That could offer a boost ASX 200 lithium shares as it would open the door to US investments in the sector.
Speaking to parliament yesterday, Albanese highlighted the importance of being counted as a domestic source (courtesy of The Australian Financial Review):
[This will allow] our industries to benefit from the Inflation Reduction Act [creating] big opportunities for Australia to build our renewable energy industry and create jobs.
Resources minister Madeleine King added: "It would make it easier for American money to flow to certain types of Australian projects, including critical minerals."
Is this ASX 200 lithium share 'ideally placed' to benefit?
Which brings us to an ASX 200 lithium share that looks well-positioned to take advantage of any new funding coming in from the US.
Namely, Liontown Resources Ltd (ASX: LTR).
Liontown, as you may be aware, received and rejected a takeover offer from US lithium giant Albemarle in March.
The offer valued Liontown at $2.50 per share. That was higher than the Liontown share price at the time, but lower than the current share price of $2.76.
And with the ASX 200 lithium share already engaged in supplying the battery-critical metal to US industries, Liontown managing director Tony Ottaviano said the miner is "ideally placed" to take advantage of the new pact.
According to Ottaviano (quoted by the AFR):
I applaud the Australian and US governments for deepening their commitment through the new compact to expand critical mineral supply chains and drive the necessary collaboration with industry to deliver. This 'step-up' provides the foundation for truly transformative change.
He noted that lithium from Liontown's Western Australian Goldfields will supply the first hydroxide refinery in the US state of Texas "and in so doing produce 'IRA compliant' battery-grade lithium".
Ottaviano added:
Liontown is ideally placed and intrinsically linked to the United States, and looks forward to working with the government and our strategic customers to maximise the potential of our Australian-owned tier-1 lithium project.
