FX.co ★ Lithium Surges on Key Mine Closure

In August, lithium carbonate prices surged beyond CNY 75,000 per tonne, nearly wiping out the year's earlier decline and reaching levels not seen since March. This price increase was driven by the potential for reduced output from key mines, which countered fears of oversupply. The Chinese government committed to reducing capacity in major industries that have been impacted by deflationary pressures in recent years. This move has prompted investors to anticipate a reduction in lithium supply from China, the world's leading producer of refined lithium. Hopes for mining policy reform gained momentum after CATL, the globe's leading battery manufacturer, halted operations at its Jianxiawo mine due to unsuccessful attempts at renewing a critical mining permit. This particular mine contributes to approximately 5% of the world's supply. In the previous year, global production was 35% higher, significantly boosted by robust output from China, Indonesia, and the Democratic Republic of Congo. Although production from primary suppliers is expected to continue growing this year, miners are hesitant to voluntarily cease operations to maintain their market share and preserve relationships with governments and battery manufacturers.