Lithium market soars after Contemporary Amperex Technology Co. Ltd. (CATL) confirmed it has halted operations at its Jianxiawo mine in Yichun, Jiangxi province — one of the largest in the world.
The closure, reportedly tied to an expired mining license, has triggered a sharp rally across global lithium producers, with investors weighing the possibility of broader production restrictions in China.
Market Reaction
Tianqi Lithium Corp. shares jumped as much as 19% in Hong Kong, while Ganfeng Lithium Group surged 21%. In the U.S., Albemarle Corp. spiked over 15% intraday, Piedmont Lithium rose nearly 18%, Lithium Americas gained 13%, and Chile’s SQM advanced 12%.
On the Guangzhou Futures Exchange, lithium carbonate contracts hit the daily limit of 8%, holding firm at 81,000 yuan per ton — up from Friday’s 75,000 yuan settlement. Spot prices in China climbed to 75,500 yuan per ton, the highest since February.
A Strategic Supply Shock
According to Bank of America, the Jianxiawo mine accounts for roughly 6% of global lithium output, with other Yichun mines representing an additional 5%. A prolonged shutdown could tighten supplies in an already volatile market.
“This will mean the lithium price in the near term has very big upside,” said Matty Zhao, co-head of China equity research at Bank of America, in a Bloomberg TV interview.
While CATL insists the halt will have minimal operational impact on its battery manufacturing, analysts note the broader lithium supply chain could face constraints — especially if Beijing extends restrictions beyond a single site.
Policy and “Anti-Involution”
The closure comes amid China’s so-called “anti-involution” campaign, an initiative targeting overcapacity across industries from e-commerce to EVs and steelmaking. Analysts at Citigroup suggest the government may be seeking to re-price lithium as a strategic resource, ensuring it is mined in a “proper and compliant” way.
Local authorities in Yichun have requested reserve reports from eight other mining operations following compliance audits. Industry watchers are now eyeing September 30 as a potential inflection point for broader production curbs.
Global Ripple Effect
Australian producers also saw sharp gains: Pilbara Minerals (PLS Ltd.) rose up to 20% in Sydney, Liontown Resources jumped 25%, and Mineral Resources added 14%.
Despite recent oversupply pressures in the lithium market — exacerbated by slowing EV demand and policy changes, including the rollback of U.S. incentives — a coordinated supply cut could reset pricing dynamics.
For investors, the CATL mine halt underscores lithium’s vulnerability to geopolitical and regulatory shifts. As China reasserts control over its critical mineral resources, market volatility is likely to persist.
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