China’s biggest lithium mine loses licence

CATL’s Jianxiawo lithium mine, China’s largest by capacity, is back in care and maintenance after regulators revoked its environmental approval, delaying a meaningful return of supply to a tightening market.

Benchmark Mineral Intelligence cut its 2026 mined output forecast for Jianxiawo to 32,000 tonnes of lithium carbonate equivalent (LCE) from 62,500 tonnes. Its 2027 forecast remains unchanged at about 99,000 tonnes.

The price reporting agency and market data provider said its 2026 forecast downgrade reflects both production already lost during the shutdown and the risk that approval slips into the fourth quarter.

The setback follows a brief, informal restart in July that bypassed an unresolved dispute over the mine’s tailings pond and prompted complaints, according to Benchmark. Market sources pointed to more than 70 formal reports, forcing operator Contemporary Amperex Technology Co. (CATL) back into the environmental impact assessment process.

With nameplate capacity approaching 150,000 tonnes of LCE a year, Jianxiawo is a major swing factor for domestic supply. Completing the environmental review could take until the fourth quarter or stretch into 2027, leaving the timing of a sustained restart uncertain.

Permit hurdles

Jianxiawo’s troubles trace back to August 2025, when its mining licence expired as China tightened mineral classification rules and subjected the deposit’s lithium-bearing clay to stricter standards.

The mine then entered a drawn-out permitting process. CATL secured a safety production permit in June 2026, but expectations for an earlier restart failed to materialize as local authorities pressed the company to complete environmental paperwork.

Satellite imagery indicated activity resumed in June before stopping again during the first week of August, according to Benchmark. The short-lived return has put renewed attention on the environmental approvals required before Jianxiawo can resume sustained production.

The disruption comes as lithium demand from stationary battery storage and improving electric-vehicle sales begins to reshape a market battered by oversupply since the price boom faded in 2022.

Albemarle (NYSE: ALB), the world’s largest lithium producer, described stationary-storage demand as “off the charts” during an August earnings call. Chinese automaker and battery producer BYD has meanwhile struggled to satisfy demand for its second-generation Blade batteries while ramping production.

Lithium carbonate futures, introduced on the Guangzhou Futures Exchange in 2023, have given producers and buyers another tool to hedge risk and increased transparency in Chinese pricing. Trading volumes and open interest have since surged to records, while sharp price swings have prompted the exchange to cap new positions or increase trading fees.

Wider risk

The problems at Jianxiawo could extend beyond a single operation as authorities investigate mining licences elsewhere in Jiangxi province.

Other Jiangxi mines are expected to produce about 108,000 tonnes of LCE in 2026, but inspections could uncover waste and tailings deficiencies similar to those identified at Jianxiawo, potentially putting more Chinese supply at risk.

Expectations of unfavourable inspection results could also encourage producers to accelerate mining to use quotas that might otherwise go unused later, according to BMI analysts.

That possibility adds another layer of uncertainty to Chinese lithium supply as Jianxiawo works through its environmental review. A prolonged shutdown at the country’s largest lithium operation by capacity would remove expected tonnes from a market where stronger battery demand is already beginning to challenge the oversupply that has weighed on prices for years.