Global EV battery giant Contemporary Amperex Technology (CATL) declared on Monday that it has temporarily halted mining activities at its Yichun project in Jiangxi province, eastern China, following the expiration of its license on August 9.
Located in Yichun, often referred to as China’s ‘lithium capital,’ the mine contributes roughly 6% of global lithium production, according to Bank of America, with nearby sites supplying an additional 5%. As reported by Firstpost, citing Bloomberg, the company stated that the site will stay closed for a minimum of three months as it works to secure a renewed permit.
CATL noted that it is actively pursuing a renewal in line with regulatory requirements and intends to restart operations promptly once the new permit is issued.
The company indicated that the shutdown would have minimal impact on its battery output. Analysts view CATL’s production halt as a strong sign of Beijing’s intent to address excess capacity in the EV battery industry.
The halt aligns with Beijing’s ‘anti-involution’ initiative, which targets sectors plagued by excessive capacity. According to Citi analysts, the closure of mine in Yichun could allow China to recalibrate lithium pricing and promote stricter adherence to mining regulations.
Instability in lithium prices has a crucial role in determining the overall cost of electric vehicles. In response to mounting overcapacity, Beijing is working to end the ongoing price war in the EV sector. In May, the Ministry of Industry and Information Technology warned automakers against initiating price cuts, cautioning that such actions could lead to penalties. Goldman Sachs reported that only half of China’s EV production capacity, around 20 million units, was utilized last year.
Mainland China remains the world’s largest automotive and EV market, with electric vehicles accounting for over 60% of total car sales in 2024, according to the China Passenger Car Association.
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