Lithium carbonate prices embrace "long-awaited surge"! CATL plans to adjust lithium carbonate production arrangements in Yichun; insiders analyze the "shutdown mainly due to cost reasons."

Source: Financial Associated Press
On September 11, market rumors circulated that production at lepidolite mine of CATL in Yichun, Jiangxi would be entirely halted, with its three smelters fully shut down within a week, impacting a monthly production of over 5,000 mt. In response, CATL told the Financial Associated Press that based on the recent lithium carbonate market situation, the company plans to adjust the lithium carbonate production arrangements in Yichun.
Another informed source told the Financial Associated Press that CATL currently has not taken any shutdown measures and that further communication and coordination are needed before making a final decision. According to data from Tianyancha, Yichun Times New Energy Mining Co., Ltd., mainly responsible for mining, is jointly owned by CATL's wholly-owned subsidiary Yichun Times New Energy Resources Co., Ltd. (65%) and Yichun Mining Co., Ltd. (35%), a subsidiary of Yichun SASAC.
The aforementioned insider claimed that CATL chose to halt production at this time possibly due to cost reasons. According to the insider, the cash cost of the project at CATL is around 90,000 yuan/mt, and considering fixed investment depreciation, the full costs are even higher.
Regarding the rumors of CATL's mine halting production, an official from Lopal (603906.SH) told the Financial Associated Press, "This is also beneficial for us as a listed company since rising lithium carbonate prices will prevent LFP prices from declining." Yichun Lopal Times, jointly owned by CATL and Lopal with stakes of 30% and 70%, respectively, is the main company for the jointly built lithium carbonate project. Previously, in May, a representative from the company's securities department told the Financial Associated Press that the project's ore supply was stably provided by CATL from the Jianshangwo mining area in Fengxin County.
"The ore was previously supplied entirely by them. This (shutdown) news only came out last night, and our plant is still operating normally today," said the aforementioned source from Lopal.
Currently, Yichun Lopal Times has built four production lines with an annual capacity of about 30,000 mt, all of which are in full production. "If they (CATL) stop mining, we will look for alternative sources. If not available, we might have to temporarily perform some maintenance and adjustments," added the company official.
Regarding the impact of this shutdown, the news of "CATL's Yichun lithium mine shutdown" triggered simultaneous increases in lithium carbonate futures and spot prices. On September 11, the most-traded LC2411 contract rose over 9% at its peak during trading, and battery-grade lithium carbonate spot prices also reversed their decline, rising 950 yuan/mt on the same day. Subsequently, battery-grade lithium carbonate spot prices increased to 71,800 to 75,000 yuan/mt, with an average price reported at 73,400 yuan/mt.
The secondary market reacted violently, with lithium mining stocks experiencing a long-awaited surge. Tianqi Lithium (002466.SZ) and Ganfeng Lithium (002460.SZ) both hit the daily upside limit, as did Jinyuan Shares (000546.SZ). Sinomine Resource Group (002738.SZ), Rongjie Shares (002192.SZ), and Yongxing Materials (002756.SZ) all closed up more than 6%.
Industry insiders stated that with reduced supply and unchanged demand, prices are bound to rise, although it is uncertain how much further prices would rise. Currently, on the supply side, the lithium carbonate industry remains overly saturated. Domestic NEV sales have been strong, but overseas demand for NEVs has been lower-than-expected.
Looking at CATL's Yichun layout, since acquiring exploration rights for the Jianshangwo mining area in 2022, CATL has accelerated its Yichun investment by partnering with other firms. In just two years, CATL has established joint ventures with several Jiangxi lithium companies, including Jiuling Lithium, Zhicun Lithium, and Yongxing Materials' subsidiary Yongxing New Energy. CATL has also collaborated with Lopal from Jiangsu and Tianhua New Energy (300390.SZ) to enhance its upstream lithium battery resources in Yichun.
Public disclosures reveal that CATL's subsidiary Fengxin New Times Porcelain Stone (lithium-containing) Comprehensive Utilization Project beneficiation plant's ROM processing capacity is 33 million mt/year. On the smelting end, CATL has constructed production lines with annual capacities including 40,000 mt/year at Lopal Times (30,000 mt reportedly in production), 30,000 mt/year at Fengxin New Times, and 25,000 mt/year at Tianyi Lithium.
In fact, news of the Yichun lithium mine shutdown was not unexpected. Earlier this year, media reported that due to lithium carbonate prices falling below the cost lines of most companies, many lithium-related companies in Yichun had already ceased operations. The remaining operational firms had also significantly reduced their capacities in unison. Compared to prices of around 100,000 yuan/mt at the beginning of the year, battery-grade lithium carbonate prices have fallen by approximately 25% this year.