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This white rock is about to get a bit costlier, because of a Chinese language mine shut. Pic: Getty Photos
- CATL’s big Jianxiawo lepidolite mine suspended for at the least three months over permits
- Lithium costs have gained on provide issues amidst hypothesis suspension may last as long as 12 months
- Australian spodumene producers have marked large features at the moment on the information
Lithium tailwinds are getting sturdier, information that China’s largest lithium battery producer CATL has been pressured by Chinese language regulators to droop operations on the Jianxiawo lepidolite mine in Jiangxi province.
Benchmark Mineral Intelligence estimates the mine produces round 3% of the world’s lithium uncooked materials provide, making the suspension a bellwether for sentiment on lithium pricing, which has been crunched by a provide flood following 2022’s worth increase.
It’s the second time the mine has been shut in lower than a 12 months will reportedly final for at the least three months and is because of non-compliance with allowing necessities.
Attention-grabbing that @catl_official is studying they aren’t extra highly effective than regulators. China will retain controlling affect over #lithium worth for at the least a couple of extra years however it’s clear the Center Kingdom is aware of worth has to rise. https://t.co/4KiZ2MzBFK
— Joe Lowry (@globallithium) August 10, 2025
That had tails up throughout the ASX lithium area on Monday.
Liontown Resources (ASX:LTR) jumped 17.75% to shut at 99.5c regardless of having simply raised $316m at 73c by means of a two-tranche placement final week, whereas Pilbara Minerals (ASX:PLS) took to the skies with a 19.17% acquire to $2.30.
Mineral Resources (ASX:MIN) ran 11.68% to $37.95 whereas IGO (ASX:IGO) lagged behind its friends with an 8.6% rise to $5.43.
In the meantime, Piedmont Lithium (ASX:PLL), which is within the strategy of buying Sayona Mining (ASX:SYA) , rose 15.39% to 15c.
Superior explorers equivalent to Lake Resources (ASX:LKE), Core Lithium (ASX:CXO), ioneer (ASX:INR) and Argosy Minerals (ASX:AGY), which have feasibility research in place or that are progressing in the direction of an funding determination, additionally noticed large features.
AGY soared 31.03% to three.8c, CXO gained 12.5% to 11.3c, INR was ~21% increased and LKE is up 10.26% to 4.3c.
The affect
Shutting Jianxiawo is predicted to have a noticeable affect on lithium provides. UBS estimates it gives feedstock for 8% of China’s lithium carbonate manufacturing.
The suspension may additionally last more than three months, with MST Monetary saying that it was as a result of CATL not renewing its kaolin mining licence following scrutiny over state management of strategic sources underneath the up to date Mineral Sources Regulation, which is aimed toward countering practices that result in harmful pricing practices.
MST believes this might consequence within the suspension lasting as much as 12 months, which displays the timeline of a evaluate strategy of CATL’s mining licence renewal.
It follows the closure of eight lepidolite operations in Yichun and a crackdown in Haixi on a mine run by Zijin subsidiary Zangge Mining – with native authorities now enacting the Chinese language Authorities’s goals to restrict the competitors that has despatched costs of the battery steel spiralling.
Canaccord Genuity’s Reg Spencer mentioned in a be aware that the dealer had already factored in some closures of upper price lepidolite operations into its modelling, anticipating to see lepidolite provide of ~85,000t lithium carbonate equal vs reported capability of between 120,000t and 150,000t LCE, recovering to 120,000t LCE in 2026.
“Given the significance of those operations to native employment and tax revenues we count on it’s within the nation’s curiosity to keep up worthwhile operations,” Spencer mentioned.
“Nonetheless, ought to these suspensions be prolonged by means of to 2026 we spotlight danger to our small surplus modelled in 2026.”
Canaccord lately recommended traders ought to ‘reassess’ sector publicity as market fundamentals enhance.
Any affect on lepidolite provide might be welcomed by Australian spodumene producers, who’ve seen costs drop as little as ~US$600/t for the benchmark 6% Li2O benchmark grade of their arduous rock lithium product this 12 months.
Fetching US$8000/t at spot charges simply two and a half years earlier, the value dive has despatched nearly all lithium producers into lossmaking territory.
However demand for the steel from each electrical autos and, more and more, stationary power storage, continues to extend.
Lithium costs have already moved, with lithium carbonate futures on the Guangzhou Futures Trade rising 8% by mid-day on Monday to 80,560 yuan ($17,196) per tonne.
Spodumene provide from Australian producers can be prone to be welcomed by Chinese language refiners given they’ve a well-deserved popularity for dependable provide.
That is vital because the refiners want feedstock to keep up their manufacturing of lithium-ion batteries to satisfy rising BEV and power storage demand.
Maintain your horses
However Benchmark lithium product director Dr Cam Perks warned the Jianxiawo closure wouldn’t essentially have as large an affect on world provide and demand flows as traders are tipping with their ASX lithium splurge.
Jianxiawo is presently accountable for 30% of native provide to Jiangxi’s lithium refineries, in accordance with Perks, and its centrality to the native financial system means it’s possible the mine might be restarted, in his view.
“I believe it’s change into this bellwether for the worldwide lithium provide and demand image for some purpose,” he mentioned.
“We did see costs improve after it was shut final time, so in fact we’re seeing it this time. We’ve already seen it due to the GFEX.
“If we regarded on the GFEX for the final week, it’s simply stored going up and up.
“So it’s hardly a shock, to be sincere (that it shut). However I believe the Chinese language market is a playing market, to some extent after which the GFEX now has such large significance on the worldwide lithium stage.
“Loads of Western costs are linked to Chinese language costs.”
The large distinction this time round is that the shut has come not from CATL, which engineered final 12 months’s shut as a result of monetary losses, however from Chinese language regulators.
Even is the value run up is stark within the quick time period, it doesn’t imply Jianxiawo’s momentary closure will fully alter provide and demand fundamentals.
Benchmark sees the market heading into stability in 2027, with costs prone to be rangebound till a small deficit re-emerges round 2029.
The place it may benefit Australian gamers is that it places uncertainty across the provide of feedstock from inside China, which stays the important thing buyer for Aussie lithium producers. Making certain a dependable supply of lithium uncooked supplies provide stays open for his or her refineries is vital for the downstream market in China.
“There’s no enormous fundamentals impacted, in my view, however there’s already a dynamic on feedstock availability versus processing capability in China,” Perks mentioned.
“Clearly there’s enormous overcapacity of processing and never sufficient feedstock to feed in any respect. So there was already a little bit of dynamic enjoying on the market, slightly bit extra power in spot lately than there was within the broader market.”
Doubtlessly reflecting that dynamic, China’s Canmax Applied sciences took a 2% stake in native participant Liontown Resources (ASX:LTR) in a $50m funding final week that positioned the lithium refiner alongside the Federal Authorities’s Nationwide Reconstruction Fund as one of many Kathleen Valley mine proprietor’s latest and bigger shareholders.
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