Suspension of giant Chinese mine another lift for lithium revival
Lithium prices have gained on supply concerns amidst speculation suspension could last up to 12 months
Australian spodumene producers have marked big gains today on the news
Lithium tailwinds are looking increasingly stronger with news that China's largest lithium battery producer CATL has been forced by Chinese regulators to suspend operations at the giant Jianxiawo lepidolite mine in Jiangxi province.
The suspension – the second time the mine was shut in less than a year – will reportedly last for at least three months and is due to non-compliance with permitting requirements.
Interesting that @catl_official is learning they aren’t more powerful than regulators. China will retain controlling influence over #lithium price for at least a few more years but it is clear the Middle Kingdom knows price has to rise. https://t.co/4KiZ2MzBFK
â€' Joe Lowry (@globallithium) August 10, 2025
Shutting Jianxiawo is expected to have a noticeable impact on lithium supplies with sources flagging that it supplies anywhere from 3% to 6% of the world's refined lithium supply while UBS is estimated it provides feedstock for 8% of China's lithium carbonate production.
The suspension could also last longer than three months with MST Financial saying that it was due to CATL not renewing its kaolin mining licence following scrutiny over state control of strategic resources under the updated Mineral Resources Law, which is aimed at countering practices that lead to destructive pricing practices.
MST believes this could result in the suspension lasting up to 12 months, which reflects the timeline of a review process of CATL's mining licence renewal.
Supply and pricing
Capital Markets said it had already factored in some closures of higher cost lepidolite operations into its modelling, noting previously that it expects to see lepidolite supply of ~85,000t lithium carbonate equivalent vs reported capacity of between 120,000t and 150,000t LCE but recovering to 120,000t LCE in 2026.
However, should the suspension extend through to 2026, it expects its modelled small surplus to be at risk, which will put continued upward pressure on pricing.
Any impact on lepidolite supply will be welcomed by Australian spodumene producers as it would mean greater demand for their product.
This is particularly true since global demand for battery electric vehicle have grown this year, which has in turn raised demand for lithium.
Lithium prices have already moved with lithium carbonate futures on the Guangzhou Futures Exchange rising 8% by mid-day on Monday to 80,560 yuan ($17,196) per tonne.
Spodumene supply from Australian producers is also likely to be welcome by Chinese refiners given that they have a well-deserved reputation for reliable supply.
This is important as the refiners need feedstock to maintain their production of lithium-ion batteries to meet growing BEV and energy storage demand.
Australian lithium plays rising
The news is seen as largely positive for the lithium sector in Australia with shares of the major lithium producers all seeing significant gains.
Liontown Resources (ASX:LTR) jumped 17.75% on Monday to close at 99.5c despite having just raised $316m through a two-tranche placement last week while Pilbara Minerals (ASX:PLS) took the skies with a 19.17% gain to $2.30.
Mineral Resources (ASX:MIN) had a somewhat more subdued rise of 11.68% to $37.95 while IGO (ASX:IGO) lagged behind its peers with a 8.6% rise to $5.43.
Meanwhile, Piedmont Lithium (ASX:PLL), which is in the process of acquiring Sayona Mining (ASX:SYA), rose 15.39% to 15c.
Advanced explorers such as Lake Resources (ASX:LKE), Core Lithium (ASX:CXO) and Argosy Minerals (ASX:AGY), which have feasibility studies in place or which are progressing towards an investment decision have also seen big gains.
AGY soared 31.03% to 3.8c, CXO gained 12.5% to 11.3c and LKE is up 10.26% to 4.3c.
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