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Jiangsu Lopal Tech Co. and Contemporary Amperex Technology Co. Ltd. (CATL) have restarted their lithium refinery in Yichun, Jiangxi province, after nearly five months of suspension, according to several media reports. This move comes despite lithium prices experiencing a drastic decline of nearly 90% since late 2022 due to an oversupply and slower-than-expected growth in electric vehicle (EV) demand.

According to several media reports, the Yichun lithium carbonate refinery, a joint venture between Lopal and CATL鈥攐ne of the world鈥檚 leading EV battery manufacturers鈥攊s expected to produce approximately 3,500 tons of lithium carbonate this month. The restart of operations raises concerns about additional supply exerting further pressure on lithium prices, which remain significantly low. The lithium market has been struggling with an oversupply, causing several producers to suspend operations or delay expansion projects. Many analysts still anticipate a continued surplus in the lithium market throughout the year.

The refinery in Yichun was initially shut down around mid-September 2023, as reported by several media outlets. At the time, CATL had announced plans to adjust production at its nearby mine, which is one of China鈥檚 largest lithium deposits. The mine produces lepidolite, a low-grade lithium ore, and CATL鈥檚 decision to recalibrate its output was seen as part of an effort to balance supply levels.

Despite the current downturn, lithium remains a key element in the production of EV batteries and energy storage solutions. However, lithium prices have faced intense pressure due to an increase in production coupled with a slowdown in EV sales growth. This price collapse has prompted some producers to reduce capacity in an attempt to stabilize the market. According to several media reports, CATL鈥檚 decision to restart production at Yichun suggests that major industry players are prioritizing long-term supply chain security over short-term market fluctuations.

While several media reports, predict a prolonged period of low prices, many also believe that the market could eventually stabilize as demand for lithium rebounds. Given that lithium is an essential component in battery production, long-term prospects remain positive, even though short-term challenges persist.

The restart of the Yichun refinery underscores China鈥檚 growing dominance in the global lithium supply chain. As the world鈥檚 largest EV battery producer, CATL continues to expand its lithium refining and mining operations to secure a stable raw material supply for its battery production.

Although concerns about a prolonged price downturn persist, CATL and Lopal鈥檚 decision to resume lithium refining operations reflects their confidence in the long-term growth of the EV sector and the fundamental role of lithium in the future of energy storage.