Lithium Market Erupts After Battery Giant CATL Shuts Major Mine

Lithium prices and stocks spiked on Aug 11 after battery giant Contemporary Amperex Technology (CATL) halted operations at a major mine in China, spurring speculation that Beijing might move to suspend other projects as it tackles overcapacity across the economy.

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SHANGHAI -

Tianqi Lithium jumped as much as 19 per cent in Hong Kong, while Ganfeng Lithium Group surged 21 per cent, and Australian miners rallied, after CATL confirmed it had shut the mine in Jiangxi province. Prices of the battery metal on the Guangzhou Futures Exchange surged by the daily 8 per cent limit.

The fate of the CATL mine - the biggest in China's lithium hub of Yichun - had been under close scrutiny for weeks, amid speculation that the authorities would not extend its licence.

The mine accounts for some 6 per cent of global output, according to Bank of America, while other mines in the region account for at least another 5 per cent.

"I think it will mean the lithium price in the near term has a very big upside," co-head Matty Zhao of China equity research at the lender said in a Bloomberg TV interview.