Australian lithium stocks experienced a significant downturn on Wednesday following news that Chinese authorities have approved a key report for a major lithium mine, potentially leading to its restart. The approval is a setback for investors who were anticipating a reduction in the current oversupply in lithium markets. The green light was given to Contemporary Amperex Technology (CATL) for its Jianxiawo mine. CATL is a global leader in the development and manufacturing of lithium-ion batteries, powering electric vehicles and energy storage systems. The approval paves the way for the mine to potentially restart operations in the fourth quarter.
The market reacted swiftly to the development, with several ASX-listed lithium companies seeing sharp declines in their share prices. Pilbara Minerals (PLS), which recently regained its position as the most shorted stock in Australia, led the losses with an 8 per cent drop.
Other significant players in the lithium sector also felt the impact. Liontown Resources experienced a 10 per cent decrease, while Mineral Resources saw a 5 per cent decline. IGO Limited also faced downward pressure, with its stock price falling by 4 per cent.
The news has raised concerns about the potential for further downward pressure on lithium prices, as the market grapples with existing oversupply issues. The Jianxiawo mine’s restart could exacerbate these conditions, impacting the profitability and outlook for Australian lithium producers.
