Tesla and BYD's battery performance lessens, while SQM and Albemarle show improvement in battery sector
In a significant development, Chinese battery giant CATL has announced a production stop at its Jianxiawo lithium mine, causing a surge in lithium prices and gains in the share prices of major lithium producers.
The license for CATL's key lithium mine expired on August 9, 2025, leading to a suspension of production at this major site in Jiangxi province for at least three months while the company seeks renewal. This mine alone produces over 46,000 metric tons of lithium carbonate equivalent annually, accounting for around 3–6% of the world’s lithium output for 2025.
The immediate market response included a rise in lithium carbonate futures by 8% on the Guangzhou Futures Exchange, and significant gains in the share prices of companies like Sociedad Quimica y Minera de Chile SA (SQM) and Albemarle, which rose by 9% and 10% respectively, in yesterday's trading. Other producers such as Liontown Resources, Tianqi Lithium, Pilbara Minerals, and Lithium Americas also posted double-digit gains or sharp increases.
However, while the production halt removes a significant near-term supply, the global lithium market still expects substantial growth from other mining regions like China (outside CATL’s suspended mine), Indonesia, and the Democratic Republic of Congo, with an anticipated 35% supply expansion in 2025.
The long-term impacts are uncertain, as CATL’s closure heightens regulatory uncertainty in China’s lithium sector and could lead to more cautious investor sentiment or further government interventions aimed at controlling overcapacity.
Meanwhile, Börsenmedien AG, the developer of the E-Mobility Battery Index, has concluded a cooperation agreement with the issuers of the securities displayed, granting them a license to use the index. Investors are betting on the shares of companies like BYD, Tesla, LG Chem, and Samsung SDI in the broadly diversified E-Mobility Battery Index, which serves as a financial instrument for betting on the continuation of the trend in the lithium market.
Here's a summary of the impacts:
- Supply effect: ~3% cut in global lithium supply due to CATL's halted mine
- Immediate market reaction: Lithium prices surged ~8%, share prices of SQM, Albemarle, and other producers rose sharply
- Long-term market outlook: Supply growth expected elsewhere, but ongoing regulatory scrutiny in China could affect future output and investment sentiment
- Regulatory context: Chinese government crackdown on overcapacity in lithium and battery sectors, increasing scrutiny over mining licenses
While CATL’s production halt has stimulated a short-term price rally and boosted lithium miners’ share prices, its impact on the long-term global lithium supply depends on regulatory developments and how quickly other producers can ramp up output to meet growing demand.
[1] [Link to more information about the index and the products with which one can bet on a continuation of the trend] [2] [Link to source 2] [3] [Link to source 3] [4] [Link to source 4] [5] [Link to source 5]
- The expiration of CATL's lithium mine's license and subsequent three-month production halt may have a significant impact on the renewable-energy industry, as the mine accounts for approximately 3–6% of the world’s lithium output for 2025.
- Financing in the energy sector could be affected by the closure of CATL’s mine, as the halt heightens regulatory uncertainty in China's lithium sector and may lead to more cautious investor sentiment or government interventions aimed at controlling overcapacity.
