Restart of CATL’s Jianxiawo lithium mine may be delayed, tightening balance

Market expectations around the restart of CATL’s Jianxiawo lithium operation are increasingly diverging from Benchmark’s base-case assumption that production would resume shortly after the Lunar New Year which takes place in February this year.

Claims circulating in the market this week indicate Jianxiawo requires remediation related to inadequate tailings pond impermeability and its proximity to a nearby river system. While the scope, approvals and timeline remain uncertain, sources indicate a first-quarter restart appears increasingly unlikely.

This comes amidst rising lithium prices in China, driven by an improved demand picture in the country and low lithium inventory levels.

How does this impact the lithium market balance?

Benchmark’s current base-case assumes Jianxiawo resumes production shortly after Lunar New Year. A restart materially later than this assumption would affect forecast output from where the asset is currently positioned in the supply model.

As part of an internal scenario review, Benchmark is assessing:

• Potentially halving the 2026 output of CATL’s Jianxiawo mine from ~111.4kt LCE (lithium carbonate equivalent) to ~55.7kt LCE.

• Potentially halving 2026 supply from Gotion’s Shuinanduan mine, currently forecast to be 10kt LCE in 2026.

Outside of Jianxiawo and Shuinanduan, other mines in Jiangxi province are set to contribute ~108kt LCE of lithium supply in 2026. Findings from other licence investigations in the region could turn up waste and tailings deficiencies similar to those at Jianxiawo. This implies a broader risk profile for the province. Expectations of negative final inspection verdicts could align producer incentives with sharp mining acceleration in H1 to make use of would-be unused H2 2026 quota volumes.

Under Benchmark’s latest lithium forecast, the global lithium market balance for 2026 is ~78kt LCE. A sustained delay at Jianxiawo and Jiangxi disruptions would push the market into a very tight balance and potentially a deficit. This could warrant a further reassessment of short-term pricing assumptions across 2026 and the first half of 2027, while leaving medium- and long-term price trajectories unchanged.

How does this fit into the current lithium price?

Benchmark lithium prices were already on an upward trajectory, before concerns regarding Jiangxi supply resurfaced. For instance, Benchmark’s EXW China lithium carbonate prices have risen dramatically by 40% since the start of January 2026, with CIF Asia spot prices up similarly, by 42%.

Much of the rise is attributable to gradually improving demand sentiment that has been driven by stronger-than-expected cathode demand to supply battery energy stationary storage (BESS) customers and a succession of policy announcements in China. These have included a renewed trade-in scheme for EVs, and the planned phase out of export tax rebates for batteries, nickel-based CAM and pCAM.

The latest indications that the country’s hard rock supply could be constrained for longer have compounded bullish speculation on domestic lithium carbonate futures exchanges. In turn, erratic, rising futures contract quotations have emboldened sellers to offer lithium carbonate, hydroxide and spodumene concentrate at drastically higher prices than observed throughout 2025.

How have renewed supply risks affected Benchmark’s assumptions?

These developments follow Benchmark’s recent update to near-term lithium pricing assumptions, which reflected tighter market conditions driven by low inventories, policy-related timing effects in China, stronger downstream activity and uncertainty around near-term supply restarts in Jiangxi.

The Jianxiawo situation represents a further downside supply risk to be actively monitored, rather than a trigger for an immediate forecast revision.

Benchmark’s forecast team continues to monitor developments closely. While the official restart timeline remains post-Chinese New Year, sources increasingly point to the risk of a materially later resumption, in the second half of 2026. Regardless of the eventual outcome, recent developments underscore how central Jianxiawo, and Jiangxi more broadly, remain to the lithium market’s short-term risk profile.

Even absent confirmed production losses, uncertainty around Jianxiawo is once again proving sufficient to move prices, reinforcing Jiangxi’s role as the market’s primary near-term swing factor.