Lithium Stocks Rally as China’s Largest Mine Closure Spurs Hopes of Supply Relief, Boosting North American Producer Shares
Shares of major North and South American lithium producers surged after news that China’s largest lithium mine had been forced to halt operations, sparking expectations of a supply squeeze and potential price rebound in the global battery metals market.
CATL, the world’s biggest battery manufacturer, confirmed on Monday the closure of its Jianxiawo mine in Yichun, China’s key lithium hub, after its operating permit expired. The company is seeking renewal, but the mine’s future remains uncertain amid speculation that Chinese authorities may not extend the license. The mine accounts for around 6% of global lithium output, according to Bank of America Corp.
“In the short term, abrupt supply cuts would trigger further price volatility, disrupt the domestic battery industry and benefit foreign lithium miners,” said Martin Jackson, head of battery raw materials at consultancy CRU Group.
The market reaction was swift. Albemarle Corp. — the largest US lithium producer — saw shares jump nearly 16% in New York, its biggest single-day gain in four months. Piedmont Lithium Inc. rose 18%, Lithium Americas Corp. gained 14%, and Chilean producer SQM climbed 12% in US trading.
Lithium producers have been under pressure for months due to a global oversupply and slowing EV demand, exacerbated by US policy changes, including former President Donald Trump’s rollback of EV purchase incentives. Analysts say the suspension of the Jianxiawo mine could help ease the glut, potentially lifting slumping lithium prices.
Bloomberg Intelligence analyst Sean Gilmartin noted that reduced Chinese output would support near-term price gains for global producers like Albemarle and SQM. He added that the market appears to have found a price bottom, with stronger fundamentals expected over the next two years as supply expansion slows.
Demand for lithium — a critical material for EV batteries, energy storage systems, and portable electronics — is still expected to grow by 15% in the same period, driven by accelerating electrification and renewable energy adoption.
For India’s EV sector, the development could have mixed implications. While higher global lithium prices may push up battery costs for domestic manufacturers, the potential stabilisation of the market could also ensure supply chain predictability. Experts say it underscores the urgent need for India to diversify its lithium sourcing, including exploring domestic reserves and overseas mineral partnerships under the country’s Critical Minerals Policy.With the Jianxiawo mine offline and no certainty on when — or if — it will resume operations, the lithium market enters a period of heightened volatility. For now, investors are betting on tighter supply and stronger prices, setting the stage for potentially significant shifts in the global EV battery landscape.
