Drones hover over CATL mine as lithium market anxiety rises

Traders have been flying drones over a lithium mine run by battery giant Contemporary Amperex Technology Co. Ltd. (CATL) in the hope of gauging the state of the operation days before a key permit expires, a symptom of the acute supply anxiety that has gripped the market.

The lithium sector has been buffeted in recent weeks by extreme volatility in the spot, futures and equity markets amid uncertainty over production disruptions and rising government scrutiny. Major supply concerns include CATL’s Jianxiawo mine, forecast to account for about 3% of the world’s mined production. It is awaiting an extension to its mining paperwork if it is to continue working beyond this weekend.

Drones have been hovering above the mine to monitor its conveyor belts and potentially catch a change in its operations, according to two traders who attended a conference held this week in Yichun, China’s lithium mining hub in Jiangxi province.

Yichun emerged as a battery-metal hub through the boom years. Traders and analysts have been closely watching activity in and around the city, plus efforts to regulate producers there as Beijing pledges to crack down on excess supply across industries.

The most-active lithium futures in China hit more than 80,000 yuan ($11,128) in July on the Guangzhou Futures Exchange, though it later moved to cool speculative trading. This week the material has surged around 9% to change hands at 75,000 yuan on Friday.

CATL did not immediately comment on queries emailed by Bloomberg.

The Chinese company told investors last week it had submitted an application to extend the permit. It added that the mine was operating normally.

(By Annie Lee and Alfred Cang)