China’s largest lithium battery manufacturer CATL has said it will halt extraction in one of its lithium mines, potentially easing excess supply in the market.
As a result, global lithium prices will rise by 20-25% over the next two to three months, Citi Research predicts.
The decision to stop mining lithium carbonate in Yichun, Jiangxi, will reduce China’s monthly production of the mineral by 8%, found a UBS analysis quoted by Blooomberg on 11 September. CATL later told Daily Economic News that the halt is likely to occur in October.
Since peaking at CNY 600,000 (USD 85,000) per tonne in 2022, global lithium carbonate prices fell by almost 90% to CNY 80,000 (USD 11,000) in August 2024. The price of lithium has been below CATL’s production cost since mid July, according to data cited by Yicai.
The global electric vehicle (EV) industry has grown rapidly in recent years. With lithium being a key component in EV batteries, it has been dubbed the “white gold” of the energy transition, attracting investment from battery manufacturers around the world.
Prices declined after 2022 as global lithium supply capacity increased. As demand and growth in the EV market fell short of expectations, debates about overcapacity in China’s EV industry emerged.
Mining for lithium, and other critical minerals, has increasingly become a geopolitical issue. The Financial Times reported that Albemarle, a US company and the world’s largest lithium producer, is urging governments to intervene and reduce China’s dominance of EV battery minerals. Lithium-rich countries like Australia have started restricting Chinese companies from aquiring mines.
Meanwhile, nations such as Chile, Brazil, and Bolivia are organising a “Lithium OPEC” to wrest control of the market away from China and the US. In May, the Biden administration announced a 100% tariff on EVs imported from China, followed by Canada in August.
The long-term impact of CATL’s decision on China’s EV and battery storage industry remains to be seen. Zheng Xiaoqiang, a researcher at the New Energy Division of Shanghai Steel Union, told People’s Daily that although growth in EV sales has slowed this year, it will remain steady.
Read Dialogue Earth’s earlier story on China’s position in the global race for alternative EV batteries.