Lithium prices and stocks jump after CATL halts major China mine
Lithium prices and stocks surged after Contemporary Amperex Technology Co. Ltd. suspended activity at a major mine, spurring hopes of wider output curbs as Beijing cracks down on overcapacity across the economy.
Tianqi Lithium Corp. spiked as much as 19% in Hong Kong, while Ganfeng Lithium Group Co. jumped 14% after CATL — the world’s biggest battery producer — confirmed it had shut a major lithium mine in China. Prices of the metal on the Guangzhou Futures Exchange surged by their daily limit at Monday’s open.
The lithium industry has been struggling with a global supply glut and slower-than-expected electric-vehicle demand growth, and the potential halt of CATL’s mine was seen as important for reining in output. Lithium prices hit a record high in 2022 but have collapsed nearly 90% since then, forcing companies worldwide to rein in spending and delay expansions.
CATL has suspended production at its Jianxiawo mine in China’s Jiangxi province for at least three months, people familiar with the matter said at the weekend, after its mining license expired on Aug. 9.
The EV battery giant confirmed on Monday that it had halted operations, but didn’t give any timeline for the restart. It said it was applying to renew its mining license, after which production would resume “as soon as possible,” and the stoppage would have little impact on CATL’s overall operations. Its shares rose as much as 2.8% in Hong Kong.
The most-active lithium carbonate futures contract on the Guangzhou Futures Exchange jumped by the daily limit of 8% at the open on Monday, according to traders who have access to live pricing. They asked not to be named as they aren’t authorized to speak publicly. The contract due in November traded at 81,000 yuan a ton, up from a settlement of 75,000 yuan on Friday, they said.
Shares of Australian lithium producers also spiked. PLS Ltd., formerly Pilbara Minerals Ltd., jumped as much as 19% in Sydney, while Liontown Resources Ltd. surged as much as 25%. Mineral Resources Ltd. was up as much as 14%.
Traders and industry executives are now watching for other mining curbs around China’s Yichun city, which has emerged as a battery-metals hub. A local government department has asked eight miners to submit reserves reports by the end of September, according to notes from brokers and analysts, following an audit that found non-compliance in the registration and approvals process.
“Prices may deviate from reasonable levels in the short term, but CATL’s situation does not change the oversupply structure in the market,” said Zhang Weixin, an analyst at China Futures Co. “However, if production disruption is expanded to other mines in Yichun after Sept. 30, the lithium price level could go even higher.”
Citigroup Inc. analysts said in a note that they also did not expect the suspension of production at the mine to result in a firm deficit, but it would “bolster sentiment in the short term.”
(By Paul-Alain Hunt and Annie Lee)
CATL suspends output at China lithium mine for three months
Battery giant Contemporary Amperex Technology Co. Ltd. has suspended production at a major lithium mine in China’s Jiangxi province for at least three months, according to people familiar with the matter.
CATL, the world’s largest manufacturer of electric-vehicle batteries, has announced internally that the Jianxiawo mine would be temporarily halting operations, they said. One of the people said the suspension came after the company failed to extend a key mining permit which expired on Aug. 9.
CATL didn’t immediately respond to questions from Bloomberg outside business hours.
The lithium industry has been buffeted in recent weeks by extreme volatility in the spot, futures and equity markets, and the Jianxiawo operation has been in particular focus, given questions over its permit renewal. Last week traders flew drones over the mine, forecast to account for about 3% of the world’s mined production, in the hope of gauging the current state of output.
A second person briefed on the matter said affiliated refineries in nearby Yichun had been informed of the closure. The first person added the company was still in talks with government agencies to secure a renewal but was preparing for the halt to last months. The people asked not to be named as they are not authorized to speak publicly.
CATL’s permit trouble and suspension come as Beijing cracks down on overcapacity across a host of industries and increases scrutiny of mining operations. For an industry that has been plagued by a glut for more than two years, however, the pause in output from a significant link in the supply chain will be a boon.
CATL saw revenue from its battery mineral resources business plummet 29% in 2024, a drop that underscores challenges facing the Chinese company’s upstream investments including a precipitous decline in lithium prices. These were originally intended as a way of securing supply and managing costs, and CATL had aggressively pursued mining stakes, even overseas.
The most-active lithium carbonate futures contract touched more than 80,000 yuan ($11,128) in July on the Guangzhou Futures Exchange, which moved to rein in speculative trades afterward. The material surged around 9% last week to change hands at 75,000 yuan on Friday.
(By Annie Lee and Alfred Cang)
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