Lithium prices and stocks jump after Zangge Mining halt

Lithium prices climbed to a near three?month high Thursday after a Chinese mine was forced to suspend operations, easing oversupply concerns. Shares of lithium mining companies also rallied.

Zangge, a unit of Zijin Mining Group, said in a filing that it had halted production at its mine in the western province of Qinghai following orders from local officials.

The company, which mainly produces potash but relies on salt lake-sourced lithium for a third of its revenue, had been targeting 11,000 tonnes of lithium carbonate production this year with 5,350? tonnes already produced in the first half. The mine would need regulatory approval to resume, it said.

The halt comes as the global lithium market struggles with a glut of the EV battery material. Chinese producers are also facing tighter scrutiny from Beijing, which has pledged to regulate excessive price competition across a host of industries.

The most-active lithium carbonate contract on the Guangzhou Futures Exchange rose as much as 5.5% before paring gains to 2.5% on Thursday.

Despite the dramatic price move, analysts see limited long?term impact on supply.

“Speculative sentiment is pretty strong right now but the actual impact will be limited,” Chen Jing, an analyst at Beijing-based Galaxy Futures, told Reuters.

The futures rally triggered gains in the top lithium producers. Chile’s SQM (NYSE: SQM) rose 6.19%, Albemarle (NYSE: ALB) added 5.95%, while Sigma Lithium (NYSE: SGML) was up 9.97%.