Lithium carbonate prices surged to a near three-month high on Thursday following the production suspension at Chinese brine-based lithium producer Zangge, easing oversupply concerns. Shares of lithium miners rallied globally, though analysts widely view the supply impact as limited in an already oversupplied market. The policy motivation behind the halt is drawing greater attention.
Zangge Mining, a subsidiary of Zijin Mining Group, announced it had suspended production at its Qinghai brine lithium project under local government orders. While primarily a potash producer, lithium contributes one-third of its revenue. According to its latest annual report, Zangge holds substantial lithium resources with total reserves of approximately 3.9 million metric tons of lithium carbonate equivalent. The company targeted 11,000 tons of lithium carbonate production this year, having already produced 5,350 tons in the first half. Resumption requires regulatory approval.
The suspension coincides with a global lithium surplus. Data from Fastmarkets shows lithium demand grew 24% last year, with projected annual growth of 12% over the next decade. However, Dale Henderson, CEO of Australian miner Pilbara Minerals, stated that he don’t see an end in sight to the lithium price downturn before 2030. Lithium prices have plummeted over 90% in the past two years.
The market-positive signal triggered sharp movements:
Despite the volatility, analysts foresee limited long-term supply disruption. “Speculative sentiment is pretty strong right now but the actual impact will be limited,” Chen Jing, an analyst at Galaxy Futures, told Reuters.
Chinese producers face intensified scrutiny as Beijing pledges to curb excessive competition across multiple sectors. The Central Economic Work Conference emphasized comprehensive measures to regulate local government and corporate behavior. Industry insiders highlight that government-guided phasing out of outdated capacity is urgent, while technological innovation remains key for long-term development.
