MW These lithium stocks are surging as a mine in China goes offline. Can the rally continue?

By Steve Gelsi

Supply of metal used for electric vehicles and computer batteries has been growing, but the shutdown of a mine in China is boosting lithium prices, for now

Evaporation pools for lithium extraction. Lithium stocks are rallying Monday.

Shares of lithium producers moved sharply higher in early trading on Monday, after the shutdown of a mine that produces up to 3% of the world supply of the valuable mineral for batteries that power electric vehicles, laptops and mobile devices helped boost lithium prices.

One analyst cautioned investors not to get too caught up in the near-term strength, as the fundamentals that have led to the long-term downtrend in lithium prices still aren't so supportive.

Contemporary Amperex Technology Co. Ltd. $(CYATY)$ (CN:300750) suspended production of a mine in Jiangxi, China, because the license to operate that mine expired, the Wall Street Journal reported.

KeyBanc analyst Aleksey Yefremov said the mine is expected to be shut down for at least three months.

That sent lithium hydroxide futures surging 1.8% toward the highest prices seen in more than three months. The Global X Lithium & Battery Tech ETF LIT ran up 5.6% toward a nine-month high.

Among lithium producers, Albemarle Corp.'s stock $(ALB)$ jumped 11%, Sigma Lithium Corp. shares (SGML) rose 15%, Piedmont Lithium Inc.'s stock $(PLL)$ rose 10%, shares of Lithium Americas Corp. (LAC) shot up 10% and shares of Sociedad Quimica y Minera De Chile S.A. $(SQM)$ moved up 9%.

Yefremov cautioned investors from jumping on the lithium bandwagon, as the idea that supply disruptions in China would boost lithium prices in the longer term is "lacking fundamental support" as lithium inventories continue to rise.

"Additionally, we believe there are downside risks to lithium demand over the next 6-12 months as EV sales in China could slow," Yefremov wrote in a note to clients.

While lithium futures have climbed 12% in August, they are still down 89% since their peak seen in late 2022.

Meanwhile, Yefremov noted that, in mid-July, China's Yichun Natural Resource Bureau flagged problems with eight lithium mines representing about 5% of the world's supply. These sites are under a Sept. 30 deadline to verify their reserves and comply with permits, he said.

One other Chinese operation - a site from Zangge Mining Co. Ltd. (CN:000408) - ceased in mid-July because of noncompliance, he said.

"We maintain our cautious stance on the direction of lithium prices at this stage, but are closely monitoring the impact of additional supply cuts in the near future," Yefremov wrote.

-Steve Gelsi

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August 11, 2025 09:00 ET (13:00 GMT)

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