Australia’s lithium sector faces renewed pressure after Chinese battery giant Contemporary Amperex Technology (CATL) is expected to resume production at the Jianxiawo mine in Yichun, Jiangxi province.
Operations were halted in August when the mine’s licence expired, with the suspension initially expected to last three months.
Jianxiawo produces about 65,000 tonnes of lithium carbonate equivalent annually, roughly 6 to 8 percent of global supply, making it the largest mine in Yichun, often referred to as China’s “lithium capital.”
The restart is expected to tighten competition for Australian producers, who had briefly benefited from the closure and from renewed interest in non-Chinese supply following US tariffs announced by President Donald Trump.
The resumption of production at the mine means another surge in lithium supply, which will affect the price of the battery mineral.
In fact, reports of Jianxiawo’s closure caused a spike in lithium stocks weeks ago, with Liontown Resources (ASX:LTR) leading Australian lithium players with a 25 percent bump.
Affected companies
Following the restart announcement, Liontown lost more than half of its shares’ gain after the suspension, falling nearly 17 percent.
Even mining giants BHP (ASX:BHP,NYSE:BHP,LSE:BHP) and Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO)succumbed to the situation, with both seeing a 1.7 percent drop on September 10, 2025.
Pilbara Minerals (ASX:PLS,OTC Pink:PILBF) saw a significant decrease as well, reported at 15 percent. MarketScreener said that this is the company’s worst daily record since June 1, 2022.
Mineral Resources (ASX:MIN,OTC Pink:MALRF) also experienced a record drop since August 8, falling 8 percent.
Most of these miners have been making strategic moves towards addressing lithium demand.
Rio Tinto acquired Arcadium Lithium last March and is currently progressing its Rincon project in Argentina.
Just this August, Mineral Resourced entered into a joint venture with Livium (ASX:LIT) to commercialise the LieNA lithium-processing technology, an innovative process designed to recover lithium from spodumene.
In its recent report, Pilbara Minerals underlined progress at its Colina (formerly Salinas) project, which it secured through its acquisition of Latin Resources.
Colina now stands at 77.7 million tonnes at 1.24 percent lithium oxide.
As of 2025, Pilbara Minerals’ Pilgangoora mine has dethroned Greenbushes in terms of resource size, with the former holding 446 million tonnes at 1.28 percent lithium oxide.
Greenbushes is owned by the Talison Lithium joint venture between Tianqi Lithium (SZSE:002466,HKEX:9696) and Albemarle (NYSE:ALB), and is the world’s largest hard-rock lithium mine.
Liontown Resources has also made an achievement of its own with the commencement of commercial production at its Kathleen Valley plant in January 2025. The company added that Kathleen Valley produced over 300,000 wet metric tonnes of spodumene concentrate during its first 11 months of operations.
Australian government support
While lithium remains susceptible to market changes, several Australian government efforts have been assisting mining companies in the realisation of their projects.
Among these is the Battery Breakthrough Initiative (BBI) announced in the 2024-2025 federal budget, which seeks to provide AU$500 million of funding to promote the development of battery manufacturing capabilities in Australia.
BBI forms part of the Future Made in Australia agenda and may provide funding through capital grants, production incentives and the like.
Western Australia also launched an incentive of its own called the Lithium Support Program, aiming to provide AU$150 million in lithium support through a loan facility for miners and the waiving of port charges and mining tenement fees.
A recent study from the Geological Survey of Western Australia (GSWA), Curtin University and the University of Western Australia cited that Western Australia supplies around 35 percent of the world’s lithium, highlighting its potential.
The federal government also passed the Critical Minerals Production Tax Incentive in February to provide a 10 percent tax break on processing and refining costs for critical minerals, including lithium.
“The incentives are valued at AU$7 billion over the decade,” said Federal Resources Minister Madeleine King, calling the legislation a “historic moment” for the industry.
The incentive is applicable from 2028 to 2040, for up to 10 years per project.
There’s also the National Reconstruction Fund (NRF) and Critical Minerals Facility, with the latter’s initial AU$2 billion doubled to AU$4 billion, plus new investments through the NRF.
Included in the NRF’s recent investments is AU$50 million in funding to support Liontown Resources’ Kathleen Valley.
Fastmarkets was optimistic about the Australian lithium landscape in a February report, projecting that the surplus will shrink to 10,000 tonnes. After that, it anticipates a deficit of 1,500 tonnes in 2026.
“We’re expecting a rebalancing of market dynamics over the next few years,” a producer told the firm.
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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.
