LITHIUM markets surged on Monday following Contemporary Amperex Technology’s decision to suspend operations at its major Chinese mine, raising concerns about potential government intervention in the oversupplied sector, said Bloomberg News.
Battery maker CATL confirmed it closed its Jianxiawo facility in Jiangxi province after mining permits expired August 9. The shutdown will last at least three months as the company seeks license renewal.
Stock prices jumped dramatically across the lithium sector, said Bloomberg News. Tianqi Lithium soared 19% in Hong Kong while Ganfeng Lithium climbed 21%. Australian mining companies also rallied on the news.
The closed mine represents approximately 6% of global lithium output, according to Bank of America, making it the largest facility in China’s key Yichun mining hub. Other regional mines contribute an additional 5% of worldwide production.
Lithium carbonate futures hit daily trading limits on the Guangzhou Futures Exchange, with November contracts reaching 81,000 yuan per ton, up from Friday’s 75,000 yuan settlement. Spot prices in China increased 3% to 75,500 yuan per ton, the highest level since February.
The closure has intensified speculation about Beijing’s “anti-involution” campaign targeting industrial overcapacity. Lithium producers have faced challenging conditions due to global oversupply and weakening electric vehicle demand, particularly following policy changes in the United States, said Bloomberg News.
“I think it will mean the lithium price in the near term has very big upside,” said Matty Zhao from Bank of America in a Bloomberg interview.
CATL, the world’s largest battery manufacturer, indicated the suspension would minimally impact overall operations. The company’s shares gained 2.8% despite the closure announcement.
