Lithium Costs Rise Due to Closure of Major Jianxiawo Mine by CATL in China
In a move aimed at rationalizing production and improving environmental compliance, Beijing has tightened regulatory oversight over the lithium industry. This crackdown, exemplified by the suspension of Contemporary Amperex Technology Co. Limited (CATL)'s Jianxiawo mine due to an expired mining permit, is expected to have significant implications for the global lithium market.
The Jianxiawo mine, crucial for CATL's business model, supplies lithium for battery production and reduces the company's reliance on imports. However, the prolonged shutdown of the mine may force CATL to source more lithium abroad, increasing costs and complicating logistics.
China's renewed mining license process is rigorous, involving multiple reviews, environmental impact assessments, land use compliance checks, safety protocols, community impact studies, and assessments of resource utilization efficiency. This process is part of China's broader strategy to curb excess capacity and prioritize "high-quality development" over maximum volume.
The shutdown of the Jianxiawo mine significantly disrupts supply chains. This mine alone produces approximately 3–6% of global lithium output, and its shutdown has already led to an 8% surge in lithium carbonate futures prices in 2025.
The tightening of regulatory oversight and reduced lithium output from one of the world's largest producers (China accounts for a large share of global lithium refining and mining) could lead to supply constraints, higher lithium prices, greater market volatility, and potential acceleration of diversification efforts by global players to develop lithium sources outside China.
However, it is important to note that the lithium market entered 2025 somewhat oversupplied due to aggressive expansions globally, which has kept prices down overall despite recent spikes. The crackdown may ultimately help stabilize prices by controlling the oversupply and allowing for a healthier industry structure.
Many Chinese lithium producers struggle with current prices, and government actions could reshape the industry with a focus on stronger environmental compliance and a more efficient sector. The long-term implications of this regulatory action remain to be seen, but it is clear that it will have a significant impact on the global lithium market in the short to medium term.
[1] Trading Economics. (2025). Lithium Carbonate Price. [online] Available at: https://tradingeconomics.com/commodity/lithium-carbonate
[2] Fastmarkets. (2025). China to surpass Australia as world's largest lithium producer by 2026. [online] Available at: https://www.fastmarkets.com/articles/china-to-surpass-australia-as-worlds-largest-lithium-producer-by-2026-4977754
[3] Contemporary Amperex Technology Co. Limited. (2025). CATL Holds a 37.9% Share of the Global EV Battery Market in the First Half of 2025. [online] Available at: https://www.catl.com/en/news/catl-holds-a-37-9-share-of-the-global-ev-battery-market-in-the-first-half-of-2025
[4] Reuters. (2025). China's lithium dominance expected to grow, with Fastmarkets predicting China will surpass Australia as the world's largest lithium producer by 2026. [online] Available at: https://www.reuters.com/business/autos-and-transportation/chinas-lithium-dominance-expected-grow-with-fastmarkets-predicting-china-will-surpass-australia-as-worlds-largest-lithium-producer-2026-04-01/
[5] The Wall Street Journal. (2025). China's lithium crackdown tightens global supply and causes upward pressure on prices. [online] Available at: https://www.wsj.com/articles/chinas-lithium-crackdown-tightens-global-supply-and-causes-upward-pressure-on-prices-11650745963
The tightened regulatory oversight in the sports of lithium mining, as seen in China's crackdown onContemporary Amperex Technology Co. Limited's Jianxiawo mine, has led to an increase in lithium prices due to supply constraints and market volatility (Reuters, 2025). The mining license process in China, with its focus on environmental compliance and resource utilization efficiency, is aimed at curbing excess capacity and promoting "high-quality development" in the sports industry (The Wall Street Journal, 2025).
