Contemporary Amperex Technology Co., Ltd. (CATL) has temporarily halted production at its Yichun lithium mine in Jiangxi province after its operating license expired on August 9. The company said it has applied for a license renewal and will resume production once approval is granted.
Following the announcement, the most active lithium carbonate futures contract on the Guangzhou Futures Exchange surged by 8%, hitting the daily price limit. Shares of lithium producers in China and Australia climbed more than 10% as investors anticipated that reduced supply could help support prices amid a government-led effort to curb industrial overcapacity.
The Yichun facility, one of several lithium assets owned by CATL, can produce approximately 46,000 metric tons of lithium carbonate equivalent annually. This output represents about 3% of the global lithium supply forecast for 2025, according to data from the Australian government. The suspension in Yichun is the first publicly disclosed stoppage in one of China’s major lithium mining hubs.
In recent weeks, China has intensified scrutiny of sectors exhibiting surplus capacity, including coal, steel and battery metals. Local authorities previously directed Zangge Mining to halt production at a Qinghai province mine, reflecting broader regulatory pressure.
On the stock market, domestic producers such as Ganfeng Lithium and Tianqi Lithium saw share gains exceeding 4% and 11%, respectively, during Shanghai and Hong Kong trading. Among Australian-listed companies, Liontown Resources led gains with a nearly 25% jump, while Pilbara Minerals, IGO, Core Lithium and Mineral Resources posted increases between 10.5% and 17.4%.
Analysts suggest the market reaction stems from expectations that supply-side reforms could alleviate downward pressure on lithium prices, which have declined by almost 90% since peaking in 2022 due to softer-than-expected electric vehicle demand and oversupply. Last September, CATL announced a scale-back of production at Yichun, only to restart operations in February. The latest suspension was first reported by Bloomberg News on Sunday.
Source: Reuters
