Lithium market exploded: closure of CATL's giant mine in China caused price surge

Lithium prices and shares of global battery manufacturers surged after the world’s largest battery producer, China’s CATL, announced the suspension of operations at its key mine in Jiangxi province. The closure of the facility, which accounts for up to 6% of global metal production, fueled speculation about broader restrictions in the sector by Beijing. This was reported by Bloomberg, writes UNN.

DetailsOn Monday, the global lithium market experienced one of its sharpest surges in recent months. The impetus was the official confirmation by Contemporary Amperex Technology Co. Ltd. (CATL) of the suspension of mining at the Jianxiawo mine – the largest facility in China’s lithium hub, Yichun.

The closure, which, according to preliminary data, will last at least three months, is related to the expiration of the mining license.

Despite the company’s statements that this step will not significantly impact its battery production, the market reacted strongly:

• Tianqi Lithium Corp. in Hong Kong rose by 19%;
• Ganfeng Lithium Group Co. added 21%, lithium carbonate futures on the Guangzhou exchange reached the daily growth limit of 8%.

According to Bank of America estimates, CATL’s mine accounts for about 6% of global lithium production, and other enterprises in the region account for another 5%. This means that any further government restrictions could significantly affect global supplies of the metal, which is critical for electric vehicle production.

Some analysts see Beijing’s decision as an element of the campaign against “involution” – a policy aimed at combating excess production capacity and stabilizing raw material prices.

This could be part of a broader strategy to preserve strategic resources and control the pace of industry growth

At the same time, according to Asian Metal Inc., spot prices for lithium carbonate in China rose by 3% – to 75,500 yuan per ton, and on electronic platforms with November delivery, they exceeded 85,000 yuan.

The closure of the mine in Yichun could be a signal for the global battery industry: despite an oversupply in the market, political and regulatory factors can instantly shift the balance of power and send prices soaring.

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