(Yicai) Aug. 11 -- Shares of several Chinese lithium companies soared after Chinese battery giant Contemporary Amperex Technology confirmed it had suspended production at its lithium mine in Yichun because its mining license expired.

Lithium salt processor Chengxin Lithium Group [SHE: 002240], lithium producer Jiangxi Special Electric Motor [SHE: 002176], battery materials giant Ganfeng Lithium [SHE: 002460], and lithium-ion battery materials firm Tianqi Lithium [SHE: 002466] all surged by the 10 percent exchange-imposed daily trading limit today.

In Hong Kong, Ganfeng Lithium [HKG: 1772] and Tianqi Lithium [HKG: 9696] climbed 20.9 percent and 18.1 percent, respectively.

CATL’s Jianxiawo mine in Yichun, which is known as China’s lithium capital, suspended production on Aug. 9 after the mining license expired, CATL said on the Shenzhen Stock Exchange’s investor exchange platform.

CATL is working around the clock to apply for the extension of the mining permit, the Ningde-based firm noted, adding that production will resume as soon as the permit is renewed. The incident is not expected to have a great impact on CATL’s operations.

The announcement came the day after Bloomberg reported, citing people familiar with the matter, that CATL had halted production at the Jianxiawo mine in Jiangxi province for at least three months after the company failed to extend a key mining permit that expired on Aug. 9.

In mid-July, the natural resources bureau of Yichun requested eight lepidolite firms to compile reports to verify their reserves by Sept. 30, according to Securities Times. They have a total annual production capacity of 160,000 tons of lithium carbonate.

However, as the bureau explicitly mentioned the issue of unauthorized license approval, this request triggered panic in the market.

Behind the tightened regulatory scrutiny in the lithium mining sector is China’s revised Mineral Resource Law, which came into effect on July 1, according to Commodities Research Unit.

The revised Mineral Resource Law stipulates that protective mining should be applied to all strategic mineral resources by relevant national authorities’ regulations, such as strengthening ecological and environmental protection in mines, safeguarding ownership of the country’s mineral resources, and legitimating the rights and interests of mine operators.

The comprehensive impacts of China’s revised Mineral Resources Law are likely to affect 17 percent of lithium supplies worldwide next year, CRU calculated.

Despite uncertainties in short-term lithium materials supplies due to some production suspensions, analysts believe that the large-scale shutdown of mines is not likely because the abrupt slash in supplies would lead to further price fluctuations and disturb the domestic lithium-ion battery sector.

The crucial moment will be Sept. 30, when the reserve reports will be submitted and Yichun’s regulatory direction will become clear.

Lithium prices have been declining in recent years, down about 90 percent in June to around CNY70,000 (USD9,745) per tonfrom their peak in November 2022. As a result, the profitability of lithium miners has been under pressure. For example, CATL’s revenue from the battery mineral resources business plunged 29 percent last year from the year before.

Editor: Futura Costaglione