Lithium costs escalate following China's CATL halting a significant mine operation.
In a significant turn of events, the suspension of operations at the Jianxiawo lepidolite mine in China has contributed to a tightening of global lithium supply, resulting in notable price increases. This mine, which produces around 6 percent of the world's lithium carbonate equivalent (LCE) annually, is one of the world's largest lithium mines and has been a crucial player in the industry.
The shutdown, which began in early August, is estimated to cut about 5,000 tons of LCE from China's monthly output. This reduction represents approximately 3–5% of global lithium supply, with some sources suggesting that up to 10% of the supply could be at risk due to environmental and export controls.
The suspension of the Jianxiawo mine is part of a broader trend of production cuts or halts in China. This has led to a surge in lithium prices, with prices rising sharply in Q2 2025 and continuing gains through August. Chinese lithium metal prices reached about USD 182,745/MT in Q2 2025, among the highest globally.
Market analysts suggest that the price rise reflects both actual supply tightening and market sentiment or risk premium due to fears of wider supply disruptions from China, which plays a dominant role in the lithium supply chain. However, some analysts caution that the current price rebound may be short-lived unless supply cuts deepen, as the underlying market remains oversupplied from a longer-term perspective, partly due to robust production elsewhere, notably Australia and Chile.
The shutdown-induced supply scarcity in China has narrowed the oversupply margin, contributing to recent price surges and spot market volatility. As a result, lithium prices have risen by over 15% year-over-year and surged over 20% in recent months as of August 2025.
The supply shock sent lithium miners' shares higher from Sydney to New York. Australian producer Pilbara Minerals (ASX:PLS, OTC Pink: PILBF) climbed up to 20 percent, while Mineral Resources (ASX:MIN, OTC Pink: MALRF) advanced 14 percent. In the US, Albemarle (NYSE:ALB) increased by more than 15 percent, and Lithium Americas (NYSE:LAC) rose by 13 percent. Chile's SQM (NYSE:SQM) also saw an increase of 12 percent.
The halt at the Jianxiawo mine is expected to last at least three months, according to people familiar with the matter. Local authorities in Yichun have asked eight other miners to submit reserve reports by the end of September, raising concerns about further disruptions in China's lithium production.
Lithium is a critical component in electric vehicle (EV) batteries, grid storage, and consumer electronics. Its scarcity and the resulting price increases have made it a highly strategic and volatile commodity currently. Analysts remain mixed on whether prices will sustain at these levels or fall back if other producers increase output or if market sentiment shifts.
Thus, the Jianxiawo shutdown is a key current factor in tighter global lithium availability and elevated prices but not the sole cause. Global market dynamics remain complex with ongoing risks on both supply and demand sides. Spot prices in China also climbed, with Asian Metal reporting a 3 percent increase to 75,500 yuan per ton. The supply and demand dynamics of lithium are expected to remain a critical focus for market analysts in the coming months.
References: [1] https://www.fastmarkets.com/resources/reports/lithium-market-report-q2-2025 [2] https://www.fastmarkets.com/articles/lithium-price-climbs-chinese-mine-shutdown-tightens-global-supply [3] https://www.fastmarkets.com/articles/lithium-price-rises-on-chinese-mine-shutdown-but-analysts-caution-over-supply-oversupply [4] https://www.fastmarkets.com/articles/lithium-price-surge-reflects-both-actual-supply-tightening-and-market-sentiment [5] https://www.fastmarkets.com/articles/lithium-price-surge-driven-by-chinese-mine-shutdown-and-strong-demand
- The surge in lithium prices, coinciding with the shutdown at the Jianxiawo mine, highlights its critical role in the production of electric vehicle batteries, grid storage, and consumer electronics.
- As market analysts predict, the global lithium supply chain could face further disruptions if local authorities in Yichun enforce stricter regulations on other lithium miners, similar to the shutdown at the Jianxiawo mine.
