【SMM Analysis】Lithium mine storm in Jiangxi escalates: CATL's mine shutdown sparks concerns over lithium carbonate supply, with September 30 potentially becoming the next critical deadline for longs and shorts

In previous analyses regarding the regulatory inspections and mining license crisis of Jiangxi's lithium mines, SMM has already highlighted the potential uncertainties in the future supply of lithium carbonate. Now, after nearly a month of market tug-of-war between longs and shorts, the dispute finally concluded on August 9: According to CATL's public statement on a mutual aid platform, its Jianxiawo mine in Jiangxi has confirmed a shutdown. The monthly reduction of approximately 10,000 mt of lepidolite supply in lithium carbonate equivalent (LCE) has propelled this industry shock into a stage of substantial supply impact.

On August 11, the lithium carbonate contract on the Guangzhou Futures Exchange (GFEX) once again hit the daily price limit, with the most-traded contract reaching 81,000 yuan. Since the mining license crisis was first publicly disclosed in the first half of July, the futures price has risen by over 14,000 yuan, a surge exceeding 20%. The initial tug-of-war between longs and shorts mainly centered on whether CATL's Jianxiawo mine would shut down on August 9. Market rumors and speculative articles were rampant, leading to increased price volatility and significant losses for some enterprises in the lithium battery industry chain. Subsequently, the market's core focus shifted once again to September 30 — whether the eight involved mine enterprises could submit their resource reserves and grade reports on time, and the subsequent review timeline would directly determine the magnitude of supply fluctuations. According to SMM, the above eight lithium mines account for approximately 75% or more of Jiangxi's total lepidolite supply in 2025.

However, the difficulty in submitting the reserves report by September 30 should not be underestimated. According to market perspectives, involved mine enterprises lacking complete data need to conduct re-exploration and drilling, a lengthy process that will inevitably lead to overdue report submissions. Moreover, the review timeline and stringency after submission add further uncertainties. Regarding the potential resumption date of CATL's mine, the market also holds significant divergences: One side believes that considering Jiangxi's local economic dependence on the lithium industry, it will push for CATL's review to be completed within 1-3 months; the other side, referencing past lithium mine approval cases and regulatory stringency, judges that the review timeline may extend to half a year or more. More critically, if the other seven mines are confirmed to require license renewal according to lithium mine standards, their shutdowns will further reduce monthly lithium carbonate supply by approximately 5,000-7,000 mt, potentially exacerbating the supply shortage. Based on these variables, we continue to use the previous analytical framework to construct three scenario models for the production and supply side of lithium carbonate:

Optimistic Supply Scenario: Gradual Recovery After Short-Term Disruptions
This scenario assumes that CATL's Jianxiawo mine will gradually resume production three months later, while the other seven mines remain unaffected. Thanks to the inventory buffer of the supporting lithium chemical plants, August production may maintain some of the previous levels. Starting from September, after depleting the inventory, production reductions will amplify and further decline, but it is expected to return to normal by the end of the year. Overall, the total impact of this incident on the lithium carbonate supply is approximately 30,000-35,000 mt, with a relatively limited impact on the supply-demand balance in H2. Some downstream enterprises can adapt to supply chain changes by increasing raw material imports and enhancing toll processing volumes.

Neutral Supply Scenario: Noticeable Mid-Term Supply Pressure
When the approval cycle exceeds three months, coupled with additional costs such as fines and royalties pushing up production thresholds, the shutdown period of Jianxiawo may extend to six months or more than a year. This will result in a monthly reduction of approximately 9,000 mt in lithium carbonate production, accounting for about 11% of the current domestic monthly output. Some market participants believe that the short-term rebound space for lithium carbonate prices may reach 90,000-100,000 yuan/mt.

Pessimistic Supply Scenario: Expansion of Supply Gap by Year-End
If all seven mines are shut down for license renewal before the end of the year, combined with the impact of CATL, the monthly output of lithium chemical plants affected by the eight mines will decrease by 15,000-16,000 mt compared to the peak period in June-July, accounting for about 20% of the national monthly output. Some market participants believe that such a large-scale supply contraction may trigger a strong adjustment in the market supply-demand pattern, with prices potentially rebounding to over 100,000 yuan/mt.

Regardless of the scenario, lithium carbonate prices have risen significantly on August 11: The average price of SMM battery-grade lithium carbonate is 74,500 yuan/mt, with an increase of 2,600 yuan/mt compared to the previous working day; the most-traded lithium carbonate futures contract reached 81,000 yuan, up 6,000 yuan/mt from the previous trading day. Market bulls believe that subsequent price increases will be directly linked to the actual reduction in supply.
However, it is still necessary to be vigilant about some factors that may hinder price increases:

Firstly, according to SMM data, the operating rate of lithium carbonate production from spodumene has rebounded from 51% at the beginning of July to 60%. The price increase is expected to stimulate the release of idle capacity and an increase in marginal supply, partially offsetting the impact of reduced production in Jiangxi. However, its actual ability to fill the gap depends on the shipping schedule of overseas lithium mines, port arrival efficiency, and the support space for the operating rate from domestic spodumene inventory, requiring long-term tracking and monitoring.

Secondly, from the perspective of the industry chain, the profits from the significant increase in lithium carbonate prices have largely flowed to overseas lithium related producers. Currently, domestic production and downstream consumption of lithium carbonate still heavily rely on overseas spodumene and direct imports of lithium carbonate, indicating a high degree of external resource dependence. Some industry participants believe that the intensity of "anti-involution " in the lithium carbonate industry may differ from that in other industries, such as PV, where domestic Chinese enterprises hold absolute dominance in the industry chain.

From an industry ecosystem perspective, while the standardization of the mining industry has increased costs for some integrated lithium carbonate producers, it has also fostered a more sustainable competitive landscape in the market. However, following the upward shift in the price center of lithium carbonate, some market observers believe that this price increase has prevented the elimination of surplus marginal capacity and delayed the complete reversal of the supply-demand for lithium carbonate in this cycle.

This industry adjustment triggered by the standardization of mining licenses is reshaping the short-term supply-demand pattern of the lithium carbonate market. Subsequent attention should be paid to the progress of report submissions, review dynamics, and the supply elasticity of spodumene by September 30th, as these factors will collectively determine the magnitude and sustainability of price fluctuations.

(Note: The other seven miner-related enterprises have not confirmed the progress of their reserve reports or subsequent production expectations. The actual impact will be based on corporate announcements.)