CHINESE battery giant CATL said on Thursday (Feb 22) its lithium mine in the southern province of Jiangxi is operating “normally as planned”, after market speculation it had halted output after a drop in lithium prices.

The company declined to give details on output levels at the Jianxiawo mine, which sits on hard rock lepidolite and is owned by CATL subsidiary Yichun Shidai New Energy Mining.

Worsening economics for lepidolite-fed lithium production fuelled market speculation that output had been cut or halted.

“Our company’s Yichun lithium mine is producing normally as planned after the holiday,” CATL said in a response to a Reuters’ request for comment.

China returned to work this week after the week-long Chinese New Year break.

One person familiar with the matter, speaking on condition of anonymity, said output at the mine had only resumed at one of two production lines.

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CATL completed phase-one construction and started production late last year at the mine, which is expected to have capacity for 200,000 tonnes of lithium carbonate equivalent (LCE) once its third and final phase is complete, accounting for a signifiant part of China’s lithium output growth.

Analysts estimate CATL’s costs of lithium carbonate production at around 120,000 yuan (S$22,382) per tonne, higher than spot prices hovering around 100,000 yuan.

Some China-based analysts said on Thursday that they expect the mine to produce 15,000 to 20,000 tonnes LCE this year, far less than expectations of 40,000 to 45,000 tonnes LCE under more normal market conditions.

“Our latest forecast of the Jianxiawo mine was at around 20,000 tonnes LCE, but the actual output could fall below that if market conditions worsen,” said Yin Yiwei, a senior analyst at commodity research house CRU.

“CATL’s phase 2, which had been expected to be completed as early as this year, will likely be delayed due to the high costs,” Yin added.

Speculation that the mine had closed prompted a rally in the shares of Australian lithium companies earlier this week. REUTERS