(Yicai) Sept. 11 -- Shares in Tianqi Lithium and other Chinese producers of lithium, a raw material used to make electric car batteries, surged by the exchange-imposed limit after Swiss banking giant UBS said that battery manufacturer Contemporary Amperex Technology is pausing production at a major lithium mine, easing a supply glut that has caused prices to plummet.

Tianqi Lithium’s shares [SHE:002466] soared 10 percent to end the day at CNY27.42 (USD3.86), while Ganfeng Lithium’s share price {SHE:002460] surged 10 percent to CNY27.84 (USD3.91). Jinzhou Yongshan Lithium [SHA:603399] and Willing New Energy [SHE:002667] all jumped by the same amount to end the day at CNY6.66 (USD0.94) and CNY6.99 (USD1) respectively.

CATL decided yesterday to suspend operations at its lithium lepidolite mine in eastern Jiangxi province because the price of lithium carbonate has now dropped below the extraction cost, UBS analysts said in a research note, citing channel checks with contacts.

The price of battery-grade lithium carbonate plunged 80 percent over the course of last year to CNY100,000 (USD14,062) per ton, and it has since tumbled a further 25 percent so far this year, according to data from the Shanghai Metals Market.

The closure of the mine will reduce China’s lithium carbonate output by around 8 percent per month, which will support the recovery of lithium prices, UBS said.

The price of lithium is likely to rebound by between 11 percent and 23 percent by the end of the year, the Zurich-based bank said. Once the price returns to cost level, at around USD10,908 per ton, CATL may reopen the mine, it added.

CATL has yet to comment on the matter.

Although previous claims that CATL was about to shut down the Jiangxi mine proved to be speculation, this time the assertion seems to be true.

CATL's local mine has stopped operating, National Business Daily reported today, citing a lithium lepidolite firm in Jiangxi province.

Earlier this year, there were rumors that the Jiangxi lithium mine, which CATL paid CNY865 million (USD121.6 million) for the mining rights to in 2022, had halted production. The Ningde-based company refuted the rumors at the time.

Editor: Kim Taylor