Lithium prices surge after CATL halts production at China mine
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The global lithium market was jolted on Aug. 11, 2025, after Contemporary Amperex Technology Co. (CATL), the world’s largest electric vehicle battery maker, suspended operations at its Jianxiawo lithium mine in Jiangxi province. The decision followed the expiration of its operating license on Aug. 9. CATL confirmed that the shutdown will last at least three months while it seeks a renewal, though no firm timeline for resumption has been provided.
The suspension surprised market participants given the mine’s role in China’s supply chain. Located in Yichun, the Jianxiawo mine has been a steady source of lithium feedstock for CATL’s domestic and international battery manufacturing operations.
Immediate reaction in lithium prices and equities
The news prompted a sharp rally in lithium prices. On the Guangzhou Futures Exchange, lithium carbonate futures rose 8 percent, hitting the daily price limit. Global equities in the sector followed. Albemarle’s shares climbed nearly 8 percent, SQM advanced about 7 percent, and Liontown Resources jumped more than 25 percent. Other notable gains included Tianqi Lithium and Pilbara Minerals, both up more than 10 percent, and Lithium Americas, which rose about 9 percent.
Exchange-traded funds tracking battery metals also gained. The Global X Lithium & Battery Tech ETF reached a nine-month high as investors weighed the impact of reduced supply from one of the industry’s most important producers.
The supply gap and its global impact
The Jianxiawo mine accounts for about 6 percent of global lithium supply. Its sudden shutdown tightens near-term availability at a time when inventories had begun to normalize after last year’s oversupply. The output reduction could give producers more pricing power in the short term, especially those with operations outside China.
The disruption is not limited to lithium ore markets. Since lithium is essential for battery-grade carbonate and hydroxide, the halt could affect manufacturing schedules for battery producers in Asia. If the shutdown extends beyond the estimated three months, the market could see price pressures similar to the spikes in 2022.
Regulatory undertones and China’s broader strategy
While the official reason for the suspension is the license expiration, market observers see possible regulatory strategy. Analysts have pointed to Beijing’s “anti-involution” campaign, which aims to reduce overcapacity in sectors such as clean energy and mining. Restricting output at large, strategically important mines could help stabilize prices and improve margins after a year of price weakness.
China has previously used regulatory measures to influence commodity markets, including rare earths and other strategic minerals. For foreign investors, the suspension underscores the risk of sudden policy-driven supply changes in critical raw materials.
Analysts split on market trajectory
Investment banks differ on the outlook. Bank of America sees “great potential” for a sustained price recovery, while Citi projects stabilization between $10,000 and $11,000 per metric ton in the coming months.
Others, including KeyBanc, warn the rally may be temporary. They cite continued oversupply, slowing electric vehicle sales, and competition from alternative battery chemistries. According to this view, the shutdown may offer a short-term lift but is unlikely to reverse longer-term downward pressure on prices.
The shutdown’s immediate effect is higher raw material costs for battery manufacturers, which could squeeze margins in the electric vehicle sector. Automakers with integrated supply chains or diversified sourcing can better manage the change, while smaller manufacturers reliant on spot market purchases may face cost pressures.
Over time, the disruption may accelerate diversification of lithium supply away from China. Australia, Chile, and Canada are likely to see stronger investment interest, while recycling and alternative extraction technologies may attract more attention.
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