Lithium prices and mining stocks surged globally Monday after Chinese battery giant Contemporary Amperex Technology Co. Ltd. (CATL) suspended operations at a major mine in Jiangxi province, fueling speculation of broader supply restrictions in the world's top lithium-producing hub.
CATL confirmed that production at its Jianxiawo mine in Yichun - responsible for between 3% and 6% of forecast 2025 global output, depending on estimates - was halted when its license expired on Aug. 9. The company said it is seeking to renew the permit "as soon as possible" and will resume production once approved.
The stoppage triggered an 8% surge in lithium carbonate futures on the Guangzhou Futures Exchange, hitting the daily price limit. Spot prices in China climbed 3% to 75,500 yuan ($10,400) a ton, their highest since February, while benchmark November contracts on the Liyang Zhonglianjin E-Commerce platform jumped by more than 10,000 yuan to 85,500 yuan a ton.
Mining shares spiked across Asia, Australia, and the U.S. Ganfeng Lithium's Hong Kong-listed shares rose as much as 21%, Tianqi Lithium gained 19%, and CATL advanced 2.8%. In Australia, Liontown Resources surged 25%, Pilbara Minerals jumped 20%, and Mineral Resources climbed 14%. In the U.S., Albemarle shares rose over 15%, Piedmont Lithium gained 18%, and Lithium Americas advanced 13%.
Market analysts said the move alleviates near-term oversupply pressure in a market that has been weighed down by weaker-than-expected electric vehicle demand and a nearly 90% collapse in lithium prices since their 2022 peak. "Essentially, this news alleviates some of the oversupply pressures which have been a constraint on underlying lithium prices," said Tim Waterer, market analyst at KCM Trade.
Morgan Stanley commodity strategist Amy Gower told clients that "depending on the length of the Jianxiawo outage, and if there are any further disruptions elsewhere, the market is likely to move closer to balance in the remainder of the year, bringing upside risk to prices." Bank of America estimates the mine accounts for about 6% of global supply.
The suspension is also viewed by some as part of Beijing's broader "anti-involution" campaign to address overcapacity in sectors ranging from EV manufacturing to steelmaking. Citigroup analysts wrote that closures in Yichun "should help China to re-price its strategic resource in the long-run, and the government can ensure lithium is mined and extracted in a proper and compliant way."
Local authorities have already ordered another Chinese lithium producer, Zangge Mining, to halt output in Qinghai province. In Yichun, regulators have reportedly asked eight miners to submit reserves reports by the end of September after an audit uncovered non-compliance in licensing and approvals.
