Lithium rebound improves export revenue projections and boosts market value of Chilean mining companies
By Martín Garretón
The suspension of operations at Amperex Technology Co. Ltd.’s (CATL) giant mine following the expiration of its license on August 9 triggered double-digit gains in producer share prices and an immediate rally in international mineral prices, benefiting Chilean companies such as SQM.
Overall, experts agree that the closure—which affects roughly 6% of global production—provides short-term upward momentum but caution that the effect could be temporary if the shutdown remains within the period announced by CATL.
While some see this as a short-term opportunity for Chile to capitalize on higher export revenues, others point out that global oversupply and the advance of alternative technologies, such as sodium-ion batteries, could temper the medium term benefits.
CATL, the world’s largest manufacturer of electric vehicle batteries, stated that “we are processing the mining license renewal application as soon as possible, in accordance with the relevant regulations,” and will resume production “as soon as possible” once approval is granted. The company added that the matter “will have little impact” on its global operations.
The Lianxiawo mine, considered the largest in Yichun (known as the heart of lithium in China), accounts for about 6% of global production, according to Bank of America. Bloomberg reported that the site had been “under close watch for weeks amid speculation that authorities would not extend its license.”
The announcement had immediate consequences. During the trading session, the market reacted strongly: Tianqi Lithium Corp. surged up to 19% in Hong Kong, Ganfeng Lithium Group Co. rose 21%, and Australian and U.S. miners such as Albemarle Corp. and Piedmont Lithium Inc. also advanced more than 10%.
In Chile, SQM-B shares closed the day with a sharp 7.98% gain, reaching CLP 44,110 per share, helping to lift the IPSA (the main local stock index) to a historic high of 8,592.53 points, an increase of 0.85%
Immediate reaction and possible scenarios
Reinaldo Salazar, Head of Studies at Sonami, told Emol that “it has already caused an immediate rise in futures prices in China.”
For Chile, he noted that “the impact could be more limited, given that much of the sales are conducted under long-term contracts, in a market where lithium does not have an open, standardized quotation like copper.”
“This episode confirms how sensitive the lithium market is to changes in supply and reinforces the urgency of unlocking the development of this resource in Chile so it can become a real and sustained benefit for the country,” he added.
Juan Carlos Guajardo, Director of Plusmining, stated that “the suspension of the largest lithium source in China—which alone represents about 6% of global production and, together with other mines in the region, totals at least 11%—has had an immediate market impact, reflected in a strong upward reaction in both prices and producer share values.” However, he stressed that “it is important to distinguish the short-term effect from the medium-term effect.”
The analyst explained that “if this shutdown is limited to three months as the official announcement states, and is not extended to other operations in Yichun, the price boost could moderate, as the market is already facing a global oversupply and subdued demand in the electric vehicle sector.”
Nevertheless, he warned that “if the closure is extended or becomes part of a systematic capacity adjustment policy by the Chinese government, we could indeed be facing a turning point in the supply-demand balance that sustains higher prices for longer.”
Regarding Chile, Guajardo indicated that “due to its cost competitiveness and quality of resources, it is better positioned to withstand these cycles, but it is not immune to the price volatility generated by such adjustments.”
He emphasized that “this episode shows how internal policy decisions in China—in this case related to license reviews and its anti-involution strategy—can immediately alter the balance of the global market.”
“For Chile, it is a reminder of the importance of monitoring such moves and adapting its commercial and regulatory strategy to protect its leadership position,” he concluded.
Price effects and technological threat
Manuel Viera, President of the Chilean Mining Chamber, stated that “CATL’s suspension will obviously affect Chile and will impact prices. First, prices will be strongly impacted because there will be less supply, which will clearly push demand to the right.”
He added that since the mine accounts for roughly 6%–7% of global production, “there will be less lithium carbonate available worldwide, which will mean a price increase. But that will be temporary, because the Chinese company will eventually resume operations, which is very positive for the Chinese economy.”
Viera warned of a more structural risk: “What worries me most is sodium-ion batteries, which increasingly threaten lithium and, in the near future, could replace it without any problem—this would be very, very harmful to Chile.”
“China is playing its chess game with raw materials. In my opinion, it is monitoring how the lithium carbonate market behaves in case it replaces it with sodium-ion batteries—that is its strategy,” he concluded.
A supply shock with market impact
From academia, Julietta Zamora, professor of Geology at Universidad del Desarrollo, agreed that this is a move with immediate consequences.
“Its suspension, which CATL describes as temporary and linked to the renewal of its license, causes an immediate supply shock in a market that is particularly sensitive to any disruption,” she stressed.
In her analysis, “in the short term (up to three months), this interruption will reduce global supply by around 3%–6%.” However, “if the pause extends beyond that horizon, in the medium term (more than three months), the persistent supply shortage could consolidate the price increase, encourage the development of new mining projects, and reactivate exploration and production investments in other producing countries.”
Zamora added that “an immediate 8% increase in lithium carbonate futures has already been recorded. If production is not resumed soon, prices could remain high, potentially consolidating a prolonged upward cycle.”
For Chile, she said, “the increase in international prices could translate into higher export revenues and greater profitability for companies in the sector. Financially, the stock market is already reflecting these expectations: SQM and other domestic players could record gains comparable to those seen in global peers.”
Domingo Ruiz, academic at Universidad de Santiago and lithium expert, offered a more cautious view: “The impact for Chile is relative, because on the one hand it is true that the value of lithium carbonate in the global market is low precisely due to an oversupply of the product.”
“While it is good news that companies like SQM and Albemarle are trading higher on the stock market, it will also depend greatly on CATL’s ability to regularize its paperwork and bring its lithium carbonate mine back into production,” he added.
In this regard, he noted that “the medium- to long-term impact should not be very significant
for these two reasons.”
Source: Emol