Summary
- CATL decided to halt lithium operations in Jiangxi province in China to ease oversupply
- Analysts believe this decision is more likely to be true this time
- Stocks in Australian lithium mines such as Pilbara Minerals Ltd. and Liontown Resources increased following the news
- Pilbara stocks had previously dropped 32% since the beginning of the year
- Liontown Resources signed a 5-year supply deal with Tesla and Ford, LG Energy Solution also secured a supply agreement with them
Article
Contemporary Amperex Technology Co. (CATL) has reportedly decided to halt lithium operations in Jiangxi province, a major mine in China, in an effort to ease oversupply for lithium carbonate equivalent (LCE). UBS analyst Sky Han commented on this decision, stating that while this is not the first time there have been rumors of CATL cutting or suspending lithium production in Jiangxi, there is a higher conviction this time based on channel checks with contacts indicating that CATL has indeed decided to suspend its lithium lepidolite operation in Jiangxi after a meeting on September 10, 2024.
As news of CATL’s decision to halt lithium operations in Jiangxi spread, stocks in Australian lithium mines experienced a jump. Pilbara Minerals Ltd.’s shares rose as high as 17% following the news, with the company’s stocks having dropped by 32% since the beginning of the year. Liontown Resources, another Australian lithium miner, also saw a 13% increase in stocks. The company started production this year and signed a 5-year lithium supply deal with Tesla and Ford in 2022. In addition, LG Energy Solution signed a supply agreement with Liontown Resources to secure IRA-compliant battery minerals.
The decision by CATL to suspend lithium operations in Jiangxi has had a positive impact on Australian lithium miners, with both Pilbara Minerals Ltd. and Liontown Resources experiencing stock increases. Pilbara Minerals Ltd. saw its shares rise by as much as 17% following the news, while Liontown Resources saw a 13% increase in stocks. These increases are significant for the companies, especially given the challenges faced by the industry at the start of the year. Pilbara Minerals Ltd. had experienced a 32% drop in stocks since the beginning of the year, making the recent increase particularly noteworthy.
Liontown Resources, in particular, has seen positive developments as a result of CATL’s decision, having signed significant supply agreements with major players in the industry such as Tesla, Ford, and LG Energy Solution. These agreements provide a strong foundation for Liontown Resources to continue its operations and secure a stable supply of lithium. The company’s production started this year, making the timing of these agreements particularly advantageous. With a focus on IRA-compliant battery minerals, Liontown Resources is well positioned to capitalize on the growing demand for lithium in the electric vehicle market.
In light of these developments, it is clear that CATL’s decision to suspend lithium operations in Jiangxi has had a ripple effect on the industry, particularly benefiting Australian lithium miners. The increase in stocks for Pilbara Minerals Ltd. and Liontown Resources is a positive sign for the companies and reflects the growing interest and investment in the lithium market. With supply agreements in place with key industry players, these Australian miners are well positioned to capitalize on the increasing demand for lithium in the electric vehicle sector, ensuring a strong future for their operations.
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