CATL’s Jianxiawo Lithium Mine Halts Production; Will Lithium Carbonate Prices Reverse?

Over the past weekend, brokerage houses buzzed with reports that CATL’s Jianxiawo Lithium Mine will suspend mining operations beginning August 10, with no immediate plans to resume production. Market consensus holds that this announcement will drive reactions in lithium carbonate futures and related equities when trading opens on Monday, August 11.

Analysts estimate that the three associated refining plants have a combined annualized capacity of 100,000 tonnes of LCE. A full suspension would reduce monthly supply by roughly 8,000 tonnes of LCE, equivalent to about 8% of China’s domestic output, exerting notable upward pressure on short-term prices.

The rumor mill first accelerated on August 9, when multiple research teams confirmed the mine’s shutdown and a projected three-month downtime. A Securities Daily reporter’s onsite visit to Huxi Village uncovered eyewitnesses who scaled the nearby hillside after dark. They reported that all excavators and bulldozers ceased operations precisely at midnight, following a final blast that locals said could be felt as vibrations in nearby homes.

One line of reasoning links the suspension to CATL’s need to balance newly effective mining regulations, resource tax adjustments, and technological upgrades. As of July 1, 2025, China’s revised Mineral Resources Law classifies lithium as an independent mineral and raises the grade threshold for associated ores to a minimum 0.4% Li₂O. These changes will directly affect resource-tax calculations and project economics.

CATL acquired exploration rights for the Jianxiawo deposit on April 20, 2022, through its wholly owned subsidiary Yichun Times New Energy Mining Co., Ltd. With a winning bid of RMB 865 million, the company secured 6.44 square kilometers of ceramic-clay (with lithium) exploration rights in Yifeng and Fengxin counties. Geological surveys estimate 960 million tonnes of petalite-quartz ore, containing 2.6568 million tonnes of Li₂O—equivalent to approximately 6.57 million tonnes of lithium carbonate—making it one of the world’s largest single lithium-mica deposits at the time.

This is not the first disruption at Jianxiawo. In September 2024, UBS reported that CATL had decided to suspend its lithium-mica operations in Jiangxi province following an internal meeting. Although earlier shutdown rumors were debunked, UBS characterized this instance as more credible. The report triggered a significant market response: on September 11, 2024, shares of 29 lithium-miner companies, including Ganfeng Lithium, Tianqi Lithium, and Welink Holdings, rallied and many hit trading limits. Lithium carbonate futures and spot prices also surged, with the September contract spiking over 9% intraday to close up 7.91% at RMB 78,450 per tonne, while battery-grade spot prices climbed RMB 1,000 to RMB 73,500 per tonne.

This week’s futures market has already begun pricing in the production halt. The September lithium carbonate contract (LCO2511) jumped more than 7.73% on August 8, extending its rally to three straight positive sessions and a weekly gain of 11.37%.

Dadi Futures argues that, under Article 50 of Jiangxi’s Administrative Licensing Law, operations could continue during the mining-permit renewal process. Yet the permit’s expiration coinciding with the timing of new regulatory directives requires a fresh safety permit once the ore-type classification changes—creating compliance and reputational pressures that make a temporary suspension unavoidable, though the downtime is expected to be brief.

Several brokerages view the shutdown as a bullish development. Caitong Securities projects that multiple Jiangxi lithium operations may face similar approval delays, potentially reducing monthly supply by 7,000–8,000 tonnes of LCE. The higher resource tax on the reclassified ore, combined with the traditional demand peak from September through November, could drive lithium carbonate prices higher. Tianfeng Securities concurs, noting that the Jianxiawo controversy may set a precedent for Jiangxi, intensifying supply-concern premiums and triggering a value reassessment.

However, fundamental data through August 8 show the average domestic battery-grade lithium carbonate price (99.5%) at RMB 72,000 per tonne, up 0.91% from August 1, while lithium hydroxide (56.5%) averaged RMB 66,000 per tonne, up 0.50%. SMM statistics as of August 7 indicate total lithium carbonate inventories at sample warehouses reached 142,400 tonnes, up 692 tonnes week-over-week. Upstream refiners reduced stocks by 959 tonnes to 51,000 tonnes, while midstream material producers added 2,271 tonnes to 48,200 tonnes. Other segments—including battery and cell manufacturers—depleted 620 tonnes to 43,300 tonnes. At month-end July, lithium-salt plants held 99,385 tonnes of LCE-equivalent ore, a 6,597-tonne increase from June. SMM reports that with cathode and cell producers’ resuming production schedules, purchasing inquiries have warmed in August, though actual transactions remain driven by rigid requirements amid firm spot premia.

Huaxi Securities observes that, despite modest sentiment improvement, downstream firms remain cautious and have yet to undertake significant inventory restocking. Overall, while the supply disruption has rattled the market, elevated lithium carbonate stocks and slow destocking—combined with volatile futures dynamics—suggest that a sustained supply correction may encounter considerable headwinds