China reduces lithium supply and global prices soar

• China closes mine and limits lithium production
• Lithium prices rise and stocks react strongly
• Global mining industry assesses impacts of Chinese measure

The global lithium market saw strong activity on August 11, 2025, after Chinese battery giant CATL suspended operations at one of the world's largest mines, located in Jiangxi. The shutdown followed the expiration of the mining license and is expected to last at least three months while the company seeks renewal. The closure directly affected prices on Chinese stock exchanges and boosted mining stocks around the world.

Experts point out that the measure is part of China's "anti-involution" campaign, targeting sectors with excess production capacity. Over the past three years, the market has faced a nearly 90% drop in lithium prices, which plummeted from nearly 600.000 yuan per ton in 2022 to around 60.000 yuan in early 2025. The Chinese government is seeking to stabilize the market through supply cuts, preventing competition from solely determining production levels.

The Jianxiawo mine, responsible for approximately 6% of global production, reinforces the strategic importance of Jiangxi province, considered the country's main lithium hub. In addition to the closure of CATL, local authorities ordered inspections at eight other mining companies in the region, demanding detailed reserves reports by September. In Qinghai, Zangge Mining was also forced to suspend its operations due to alleged irregularities.

The immediate impact was felt on the stock markets. Albemarle Corporation of the United States rose nearly 10% on the same day, while Chinese companies like Tianqi Lithium Corp. and Ganfeng Lithium Group Co. rose 19% and 21%, respectively. Australian mining companies like PLS Ltd. and Liontown Resources rose as much as 25%.

In the commodities market, lithium carbonate futures on the Guangzhou Futures Exchange hit the 8% daily price increase limit, rising from 75.000 yuan to 81.000 yuan per ton. This change quickly affected the price of spodumene and international trading on the CME Group.

Analysts believe that investor reaction goes beyond the immediate impact on production, pricing in the risk of further cuts. Cameron Perks of Benchmark Mineral Intelligence noted that Jiangxi accounts for about 10% of global supply and that broader government measures could profoundly affect the entire supply chain at a time of high demand from the electric vehicle industry.