CATL (SHE: 300750) has confirmed the suspension of production at a significant lithium mine, leading to a surge in lithium producers’ shares and lithium carbonate prices. The company halted operations at a project in Yichun, Jiangxi province, after the mining permit for the project expired on August 9, as stated in a disclosure on a stock information platform.
CATL is currently in the process of applying for an extension of the mining permit and aims to resume production promptly upon approval. The company assured that the suspension would have minimal impact on its overall operations. Meanwhile, reports from local media outlet Cailian indicated that CATL’s mining permit for the Jianxiawo mine has lapsed, although production at other lithium mines in Yichun is proceeding without any disruptions.
According to Bloomberg, CATL had previously announced the suspension of lithium production at Jianxiawo, anticipated to last for at least three months. Talks with government agencies are ongoing regarding the renewal of the license, with the possibility of extending the suspension period by additional months.
The news of the production halt at CATL’s lithium mine has had a positive impact on China’s lithium industry, which has been facing continuous price pressures. Currently, China’s most active lithium carbonate futures have surged by the daily limit of 8 percent to RMB 81,000 ($11,280) per ton. In response, shares of lithium producers traded in Hong Kong experienced significant gains, with Tianqi Lithium (HKG: 9696) rising by nearly 11 percent and CATL increasing by 1.5 percent.
Spot prices for lithium carbonate in China are hovering around RMB 70,000 per ton at present. The surge in lithium prices can be attributed to the rapid development of China’s EV industry in 2022. In November 2022, the price of battery-grade lithium carbonate soared to RMB 590,000 per ton, marking an increase of about 14 times from RMB 41,000 per ton in June 2020.
The industry is closely monitoring CATL’s efforts to secure a permit renewal and resume production at the Yichun lithium mine. The impact of this development on the global lithium market remains to be seen as stakeholders await further updates from the company and regulatory authorities.
