As per top media reports, China’s battery leader, Contemporary Amperex Technology Co. Ltd. (CATL), has stopped operations at a key lithium mine. This move surprised commodity markets and led to a rise in lithium prices. The shutdown occurred because of an expired mining license. It also comes as Beijing tightens control over excess capacity in the lithium sector.
CATL’s Major Lithium Hub Falls Silent
CATL’s mining license for the Jianxiawo lithium project in Yichun, Jiangxi, expired on August 9, 2025. Without approval to continue, the company closed the mine. CATL is now seeking a renewal. They aim to restart operations “as soon as possible.” However, experts believe the process may take at least three months due to current regulations.
Reuters highlighted that the Jianxiawo site, hailed as the “Lithium Capital of Asia,” produces over 46,000 metric tons of lithium carbonate equivalent (LCE) each year. This amount is about 3–6% of the world’s expected output for 2025. Even a short disruption at this key facility impacts global supply chains.
Beijing’s Crackdown on Overcapacity
This shutdown fits into Beijing’s broader efforts to control fast-growing industries. Officials target sectors with overcapacity, including steel, coal, and renewable materials. The lithium industry, which surged during the 2020–2022 price boom, is now under scrutiny.
Recently, authorities also ordered Zangge Mining in Qinghai province to halt production. CATL’s closure is the first major suspension in Yichun, showing that no company is safe from government actions.
Cost Pressures Threaten Viability
CATL’s cost structure shows the challenges miners face. Reports suggest production costs at Jianxiawo are around RMB 100,000 ($13,920) per ton, much higher than current market prices. This means the mine has been operating at a loss, which regulators may consider when reviewing its license renewal.
If Beijing aims to cut oversupply, delaying permits for high-cost operations like Jianxiawo could help stabilize prices.
Lithium Stocks Surge on Supply Jitters
The market reacted quickly to CATL’s announcement. Lithium carbonate futures on the Guangzhou Futures Exchange jumped 8% to the daily limit. The shutdown led to a surge in lithium stocks, and shares of lithium miners worldwide rose sharply. Investors expected a tighter lithium supply and higher prices.
As per Bloomberg,
- In Hong Kong, Tianqi Lithium’s shares jumped 19% and China’s Ganfeng Lithium rose by 21%.
Australian miners also saw strong gains in a single day due to speculative buying. Even North American lithium producers, who faced heavy losses, gained renewed interest. For instance, Albemarle also benefited from rising investor optimism
Traders believed China’s supply cuts could benefit global competitors. Analysts say this rally shows both short-term speculation and hope for lithium price recovery from Beijing’s actions.
Regulatory Hurdles Ahead
Renewing a mining license in China involves multiple reviews. Environmental impact assessments, land use compliance checks, safety protocols, and community impact studies are all part of the process. Authorities also assess resource utilization efficiency to ensure sustainable operations.
Will Lithium Supply Shocks Shake CATL’s EV Battery Dominance?
Lithium is essential for electric vehicle (EV) batteries, especially lithium iron phosphate (LFP) types that dominate CATL’s production. With CATL holding a 37.9% share of the global EV battery market in the first half of 2025, any disruption to its lithium supply could lead to wider effects.
For CATL, the stakes are high. The Jianxiawo mine is crucial for its business model, supplying lithium for battery production and reducing reliance on imports. A prolonged shutdown may force the company to source more lithium abroad, increasing costs and complicating logistics.
Higher raw material costs, supply bottlenecks, and delivery delays may impact automakers relying on CATL’s batteries. Although the global market is oversupplied, local disruptions can still cause temporary price spikes and strain supply chains.
China’s Expanding Lithium Mining Power
Despite challenges, China’s lithium dominance is expected to grow. Fastmarkets predicts the country will surpass Australia as the world’s largest lithium producer by 2026, with 8,000–10,000 metric tons more output than its rival. This is a significant increase from 2023, when China ranked third after Australia and Chile.
However, many Chinese producers struggle with current prices, and government actions could reshape the industry. The goal seems to be a more efficient sector with stronger environmental compliance.
Market Outlook: Short-Term Lift, Long-Term Questions
Trading Economics highlighted that, in August, lithium carbonate prices climbed above CNY 75,000 per tonne, reaching their highest level since March.
Analysts see CATL’s shutdown as a short-term price stabilizer, potentially forcing smaller high-cost miners to merge or exit. Producers may prioritize efficiency and compliance to avoid similar issues. Last but not least, Jianxiawo’s closure underscores the lithium market’s fragile balance and signals that unchecked mining growth may be ending.
