CATL suspends operations at Jianxiawo after mining permit expires

CATL has suspended production at the Jianxiawo mine in China’s Jiangxi Province, one of the largest lithium mines in the region, after authorities failed to extend the mine’s license to operate late last week.

Mining and refining at the site was suspended last week ahead of the expiration of its permit on 9 August. Market sources reported to Benchmark that operations at the mine are not expected to resume for at least three months.

In response, lithium chemical and feedstock prices have risen sharply in China’s domestic spot market and on futures exchanges. Benchmark received reports of battery grade lithium carbonate trades in China at RMB 77,000/tonne ($10,703/tonne) on Monday, up 9% since 6 August.

Benchmark notes the price movement is likely being underpinned by the speculative nature of lithium trading in China’s domestic market, rather than an immediate tightening of supply availability due to prevailing oversupply throughout the global lithium value chain.

Why has the mine been suspended?

Ostensibly the mine’s permit has not been renewed because China’s new mining laws, introduced at the start of this year, raised issues with the lithium content of the site’s low-grade lepidolite ore. The decision to grant a new licence now sits in the hands of the central government.

However, Beijing recently adopted an anti-rat race directive aiming to curb large industrial overcapacity across many critical industries (a key source of China’s deflationary environment), including the lithium ion battery supply chain. Therefore, it is possible that the latest tightening of permitting rules is a strategic move to bolster prices through supply curtailments.

What could the suspension mean for the lithium market balance?

Prior to suspension, the Jianxiawo mine had been projected to produce 40,000 tonnes LCE in 2025 – representing over 10% of China’s mined supply this year, according to the Benchmark Lithium Forecast.

The mine’s last shutdown occurred in September 2024 at a time when EXW China lithium carbonate (battery grade) prices traded at RMB 72,000/tonne ($10,150). These prices increased by ~8% following the suspension, before the mine resumed operations in February 2025; supported by cost improvements and its important role in the local economy.

During this period, the market balance did not shift significantly due to the abundance of stockpiled material at converters. Benchmark notes that similar fundamentals are likely to be at play during this latest shutdown.

Yet, assuming the current suspension is not lifted before the end of the year, Benchmark projects that ~20,000 tpa LCE of supply will be taken out of the market in the latter half of 2025. This would reduce the global lithium market surplus by roughly a quarter and is thus likely to be supportive for prices in the second half of the year.

Market contacts have reported to Benchmark that CATL is already seeking feedstock from alternative sources, reportedly increasing orders for ex-China chemicals and feedstock to fill the shortfall.

Subscribers to Benchmark’s Lithium Price Assessment can closely monitor this price rally, using accurate, market-led price data and inventory tracking to inform contract and pricing decisions.

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