China lithium price slides over CATL restart chatter

Lithium prices in China slid by nearly 10% over the past two trading sessions amid speculation that one of the country’s biggest mines may be returning to production.

Bloomberg reported on Monday that authorities in Jiangxi Province, where the massive Jianxiawo mine is located, last week issued a preliminary and limited government land assessment, fueling investor bets that the operation could be restarting.

Jianxiawo, owned by EV battery giant CATL, was forced to shut down last August after its permit expired. That led to a spike in lithium prices, as the mine is expected to account for 3% of the global production, according to analyst estimates.

Prices were trading around 157,000 yuan (US$23,175) a tonne after falling 2.4% on Monday. After the shutdown, the most-active contracts of lithium carbonate on the Guangzhou Futures Exchange more than doubled, even topping 200,000 yuan per tonne at one point this year.

Delay

Initially, the company had aimed to resume operations in December, after submitting preliminary plans for the mine’s restart with relevant authorities. However, no update has been given on its status, and the mine remained closed.

Speculations of the restart, according to Bloomberg, came after the Jiangxi province’s natural resource department took a procedural step on land use at the site. 

“Though the exact purpose of the land use, remaining process and timeline is yet to be confirmed, the market appeared to price in the resumption of Jianxiawo in the near term,” analysts at Citigroup wrote in a note.

The bank added that it sees concern on the impact of the mine resumption’s on prices, but still expects supply-demand dynamics to be tight, citing the volume of new battery capacity scheduled for the third quarter.