On June 9, a fire broke out at Chemical Grade Plant 3, or CGP3, at the Greenbushes lithium operation. The fire was quickly extinguished, no injuries were reported, and CGP1 and CGP2 continued to operate as normal. The following day, IGO confirmed that its FY2026 spodumene concentrate production guidance of 1.375–1.425 million tonnes remained unchanged. Chemical Grade Plant 4, or CGP4, is scheduled to commence construction in 2027. Viewed in isolation, this was a well-contained operational incident. However, the location of the fire deserves closer attention. CGP3 is not part of Greenbushes’ existing production base. It represents incremental supply currently ramping up at the far-left end of the global lithium cost curve. The project involved approximately A$880 million of investment and is designed to add around 500,000 tonnes per year of spodumene concentrate capacity. First ore was fed into the plant in December 2025, and the facility had originally been expected to reach nameplate capacity around mid-2026. The damage assessment is still under way. Neither the repair cost nor the recovery timeline has been quantified. The fact that production guidance remains unchanged should therefore be understood as an initial assessment rather than a definitive conclusion. The key question is not whether IGO has immediately revised its annual guidance. It is whether the CGP3 ramp-up schedule will be delayed. Should the market be concerned when an incremental production line at the world’s lowest-cost lithium mine experiences an operational disruption? To answer this question, it is useful to examine the role of Australian lithium mines in the broader lithium pricing mechanism. Note on the CGP3 ramp-up timeline: At IGO’s FY2026 second-quarter results briefing in late January 2026, management stated that CGP3 had received first ore in December 2025 and would require approximately five months to ramp up to nameplate capacity. Some English-language transcripts recorded management as referring to completion “by the end of the calendar year.” However, based on the timing of first ore feed, a five-month ramp-up period would imply completion around mid-2026, before the end of Australia’s FY2026 financial year. This is also consistent with the company’s previous guidance. The transcript may therefore have intended to say “by the end of the financial year.” This article adopts the mid-2026 ramp-up assumption. The timing is relevant because the June 9 fire occurred only weeks before the originally expected completion of the ramp-up. The actual impact should become clearer in IGO’s fourth-quarter report, which is expected in late July. Greenbushes: A Reference Point at the Bottom of the Cost Curve Greenbushes’ most important advantage begins with ore grade. It is one of the world’s largest and highest-grade hard-rock lithium mines currently in production. Its ore grade is approximately twice the industry average. For a spodumene operation, grade directly affects processing efficiency. To produce one tonne of SC6 concentrate, Greenbushes needs to process materially less ore than a typical mine. This provides a structural advantage across mining, beneficiation, energy consumption and tailings management. Greenbushes also benefits from scale. The operation currently has several processing facilities, with combined nominal ore-processing capacity of around 6.5 million tonnes per year and spodumene concentrate capacity of up to approximately 1.5 million tonnes per year. Once CGP3 completes its ramp-up, the mine will add a further 500,000 tonnes per year of concentrate capacity. With the mine life extended to 2045, Greenbushes combines low costs with long-term supply capacity. This explains the mine’s resilience during the lithium price downturn. During 2024 and 2025, lithium prices declined sharply. A number of higher-cost Australian mines and Chinese lepidolite projects faced production cuts or temporary shutdowns. Greenbushes, however, continued to maintain relatively strong profitability and moved ahead with the CGP3 expansion. Greenbushes does not represent the industry’s average cost. It represents the most competitive end of the global hard-rock lithium cost curve. For that reason, Greenbushes is better understood as a reference point for the bottom of the cycle. As lithium prices fall, higher-cost supply exits first, while low-cost assets remain in operation. The closer prices move toward the cost range of Greenbushes, the fewer marginal producers remain capable of operating normally, and the more advanced the supply-side clearing process becomes. This does not mean that lithium prices can never fall below the cost level of Greenbushes. In the short term, inventory pressure, liquidity conditions and market sentiment can push prices below the cost levels implied by the marginal supply curve. Greenbushes is not an absolute price floor. Its significance is that it provides a structural reference point for assessing how far supply-side clearing has progressed. Greenbushes: The Largest Producer, but with Limited Freely Traded Supply Although Greenbushes produces large volumes of spodumene concentrate, relatively little of that material enters the open spot market directly. The mine is operated by Talison Lithium. Talison is owned by Tianqi Lithium Energy Australia, or TLEA, and Albemarle. TLEA is in turn jointly owned by Tianqi Lithium and IGO. Greenbushes concentrate is primarily distributed through shareholder offtake arrangements and supplied into the downstream conversion systems of Tianqi, Albemarle and their respective partners. Under normal conditions, the material is not sold directly into the open market. Greenbushes therefore provides a useful example of why lithium supply should be analysed through several different layers: Resources → Design capacity → Actual production → Saleable volume → Freely traded spot volume Greenbushes ranks among the world’s largest producers by actual output. However, because most of its concentrate is locked into shareholder offtake arrangements, the amount available for open-market trading remains relatively limited. This means Greenbushes affects lithium pricing mainly through indirect channels. First, it determines the size of the lowest-cost portion of global lithium supply and therefore plays an important role in shaping the lithium chemical cost curve. Second, its operating costs, offtake pricing mechanism and expansion schedule provide reference points for long-term contract negotiations and price assessments in the spodumene market. By contrast, short-term spot prices are often more directly influenced by marginal resources that are not fully locked into shareholder arrangements and must actively seek buyers in the market. These include certain Australian mines, African lithium resources and trader-held cargoes. This explains an apparent paradox. An additional 500,000 tonnes of Greenbushes concentrate capacity can materially change the medium-term supply-demand balance, yet its immediate impact on the spot market may be limited. Meanwhile, the shutdown or restart of a marginal mine producing only 100,000–200,000 tonnes per year can quickly influence spot quotations and market sentiment if its output is sold on a market basis. Short-term pricing is not determined solely by total production. It is also shaped by the volume of material that is freely available for negotiation and immediate transaction. The same logic applies to lithium carbonate. Price elasticity depends not only on total inventory but also on how much inventory is genuinely available for circulation. The largest producer does not necessarily exert the most direct influence over the spot market. Short-term marginal pricing is usually driven by the resources that are tradeable, negotiable and available for immediate delivery. However, shareholder offtake does not mean that Greenbushes material is completely isolated from the market. If lithium conversion plants within the Tianqi or Albemarle systems reduce operating rates, or if downstream conversion assets experience operational issues, part of the concentrate originally intended for internal consumption may re-enter the market indirectly through tolling, resale or inventory adjustments. These volumes are rarely captured in public statistics, but they can affect the actual liquidity of the spodumene market. Tracking this material requires a broader set of indicators, including shareholder conversion-plant operating rates, concentrate inventories, tolling arrangements and import flows. This type of “shadow spot supply” is harder to observe than nominal mine production, yet it can become relevant at specific points in the cycle. SC6 and Lithium Chemicals: The Direction of Price Transmission Reversed Within a Year The relationship between Australian spodumene concentrate prices and Chinese lithium chemical prices has completed a full cycle over the past year. During the first half of 2025, spodumene prices followed lithium chemical prices downward. Australian miners reduced costs materially in the first quarter but largely avoided production cuts. Mining companies remained willing to ship material, and the price of SC6 concentrate fell to around US$620 per tonne. Falling concentrate prices then placed additional pressure on lithium chemical prices, reinforcing the downward cycle. At the time, the key market question was straightforward: When would the mining sector finally reduce supply? The direction of transmission reversed in the end of third quarter. The announcement that 27 mining licences in Yichun could be cancelled, together with the suspension of the Jianxiawo mine, tightened expectations around domestic Chinese lithium supply. Lithium chemical prices moved first. SC6 prices then followed, with greater elasticity. By December, the monthly average price had recovered to around US$1,300 per tonne. Formula-based pricing mechanisms linked to lithium chemical prices allowed mining companies to capture a large share of the upside, while Chinese converters saw their processing margins squeezed. At the same time, the impairment and expansion adjustments at the Kwinana lithium hydroxide project highlighted the challenges facing Australian downstream conversion. The project has faced difficulties in cost control, production ramp-up and operational stability. TLEA’s Kwinana lithium hydroxide refinery was fully impaired in mid-2025, the second train was suspended, and IGO made clear that it would prioritize mining. These developments reinforce Australia’s role as a supplier of spodumene concentrate rather than a major lithium chemical conversion hub. As a result, the relationship between SC6 prices and Chinese lithium chemical prices is likely to remain strong. However, the speed and magnitude of transmission will continue to depend on inventories, contract formulas, shipping cycles and converter operating rates. One of the most useful indicators is the implied conversion margin between SC6 concentrate and lithium chemical spot prices. When the implied conversion margin turns negative, Chinese converters purchasing third-party concentrate are effectively losing cash on incremental production. The market then needs to rebalance through at least one of three channels: Spodumene concentrate prices decline; Lithium chemical prices rise; Converters reduce operating rates. This indicator provides a useful way to judge whether bargaining power currently sits with the mining segment or the conversion segment. Australian Mine Restarts: Lithium Prices Develop an Upper Constraint The key theme for Australian lithium mines during 2024 and 2025 was supply-side clearing. In 2026, the theme has shifted toward reactivation. As lithium prices recovered during the first half of the year and futures briefly exceeded RMB 200,000 per tonne, a series of restart decisions emerged across May and June. Project Action Timing Key Point Bald Hill, Mineral Resources Restart after approximately 18 months of suspension Restart announced in May; first concentrate expected in July Restart cost of around A$20 million Ngungaju, PLS Processing plant restart Planned for July Approximately 200,000 tonnes per year of restored output Finniss, Core Lithium Final investment decision approved; financing secured Targeting first ore in the third quarter Financing package of approximately US$205 million Kathleen Valley, Liontown Expansion under assessment Ongoing Further details pending Mt Cattlin, Rio Tinto Remains suspended Suspended since March 2025 Restart conditions remain unclear Taken together, these cases show that the true threshold for mine restart is more complex than a simple comparison between lithium prices and cash costs. Bald Hill moved from restart announcement to expected first concentrate production in around two months. The mine had remained in a production-ready care-and-maintenance state, and Mineral Resources has its own mining-services platform, allowing it to mobilize mining, crushing and haulage internally without relying heavily on external contractors. This type of asset represents the fastest-reacting segment of supply when prices recover. Finniss is a different case. The project first monetized inventories through Glencore to improve liquidity, then assembled a financing package involving convertible debt, additional borrowings and equity issuance before reaching a final investment decision. For miners with weaker balance sheets, a restart is not simply an operational decision. It is a financing event. A low-price cycle does not eliminate the resource base. It eliminates the ability to finance production. The market impact of the restart wave is already visible. Lithium carbonate futures reached a two-year high of RMB 200,500 per tonne on May 13 before retreating to around RMB 160,000–170,000 per tonne in June. One reason for the pullback is that the market has begun to price in the return of idle supply. The mechanism is straightforward: Prices rise → Idle capacity restarts → Expected supply increases → Prices come under pressure The list of suspended Australian mines, once ranked by restart economics and response time, effectively becomes an upside supply curve for lithium prices. The CGP3 fire and the restart wave represent two sides of the same market. At the low-cost end of the curve, incremental Greenbushes supply has experienced an operational disruption, creating a bullish signal. At the higher-cost end, idle assets are returning to production, creating a bearish signal. From a resource perspective, lithium prices in 2026 are searching for equilibrium between these two forces. Lithium Prices in 2026 May Become More Volatile, but One-Way Trends Could Be Shorter Once prices rise, the factor that ultimately limits the upside is the speed at which idle capacity returns to the market. Bald Hill, Finniss and Ngungaju represent a broader pool of suspended or standby assets that can respond when lithium prices move sufficiently above their cash-cost thresholds and remain there for long enough. However, restart supply is not instantaneous. From the moment a restart is announced, companies need to remobilize personnel, inspect equipment, resume mining and processing, build concentrate inventories and arrange shipments. Depending on the asset, concentrate may enter the market within two months or only after several quarters. This delay creates a window during which supply disruptions can push prices higher. The suspension of the Jianxiawo mine and the CGP3 fire at Greenbushes matter not because global lithium resources have suddenly become scarce, but because short-term freely available supply has tightened while idle capacity has not yet fully returned. Compared with the previous cycle, this risk-premium window appears to be shortening. An increasing number of mines are being placed on care and maintenance rather than permanently closed. Mining-services companies, traders and downstream customers are also becoming more involved in restart financing and offtake arrangements. Once prices move back above the relevant breakeven levels, some idle assets can return more quickly. This does not necessarily mean lithium prices will become more stable. Supply disruptions can still trigger rapid price increases. However, the duration and magnitude of one-way rallies are likely to face stronger constraints from restart expectations. Prices may become more volatile in the short term, but sustained unilateral trends could become shorter. Conclusion Australian lithium mines influence lithium prices through several distinct channels. Greenbushes provides a structural reference point at the bottom of the hard-rock lithium cost curve. However, because most of its output is absorbed through shareholder offtake arrangements, it does not directly determine short-term spot pricing. Spot-market tightness is more directly influenced by marginal saleable supply: Australian mines, African resources and trader-held inventories that are available for negotiation and immediate transaction. Once lithium prices rise, the speed at which suspended assets restart becomes the key constraint on the duration of the rally. The framework can therefore be summarized in three lines: Low-cost mines provide a structural reference point for the bottom of the cycle. Freely traded supply determines short-term spot-market tightness. The speed of mine restarts determines how long an upside cycle can last. The CGP3 fire and the restart wave sit at opposite ends of this framework. One represents a disruption to low-cost incremental supply. The other represents the return of higher-cost idle capacity. Lithium prices in 2026 will continue to seek equilibrium between these two forces. Lesley Yang Senior New Energy Analyst, SMM yangle@smm.cn

On June 9, a fire broke out at Greenbushes Chemical-Grade Beneficiation Plant 3 (CGP3). The fire was quickly extinguished with no casualties, CGP1 and CGP2 continued normal operations, and IGO confirmed the next day that its FY2026 concentrate guidance of 1.375 million to 1.425 million mt remained unchanged. CGP4 is planned to commence in 2027. Judging solely by the announcement, this was a well-handled operational incident. However, the location of the fire warrants closer attention: CGP3 is not existing capacity but incremental capacity being ramped up at the far left of the global cost curve – with a total investment of about AUD 880 million, designed to add approximately 500,000 mt/year of concentrate capacity, and which only achieved first feed in December 2025 and was originally expected to reach full production by mid-this year. The damage assessment is still ongoing, repair costs and timetable are yet to be quantified, and the so-called "guidance maintained" is based only on information from the initial stage of the incident. What merits tracking going forward is not the guidance itself, but whether the timing of reaching full production will be delayed. At the world's lowest-cost mine, a new production line has had a minor incident – should the market be concerned? Today, I aim to break down and clarify this mechanism by analyzing the role of Australian ore in the lithium price formation. Note: Clarification on the timeline for CGP3 reaching full production. At its FY26 Q2 results briefing in late January 2026, IGO stated that CGP3 achieved first feed in December 2025 and that ramp-up to nominal capacity would take approximately five months. Some English transcripts recorded management's remarks as "completing ramp-up before the end of the calendar year" (end of the calendar year). However, based on the timing of first feed, five months corresponds to mid-2026, i.e., before the end of the Australian financial year (FY26), which is consistent with the company's previously disclosed guidance of "reaching full production in mid-2026." The transcript likely mistook "end of the financial year" for "end of the calendar year." This article adopts the "mid-2026 full production" timeline. This timing implies that the June 9 CGP3 fire occurred a few weeks before the originally scheduled full production, and the actual impact will be confirmed in IGO's Q4 report (expected in late July). Greenbushes: A Benchmark at the Bottom of the Cost Curve Greenbushes' most fundamental advantage lies first in its ore grade. It is one of the world's largest and highest-grade hard-rock lithium mines in production, with raw ore grade roughly double the industry average. For spodumene mines, grade directly determines mining and processing efficiency. To produce one tonne of SC6 concentrates, Greenbushes needs to process significantly less raw ore than typical mines, giving it natural cost advantages in mining, beneficiation, energy consumption, and tailings management. Building on its high-grade ore, Greenbushes also benefits from economies of scale. The mine site now hosts multiple beneficiation plants with a combined nominal processing capacity of approximately 6.5 million mt/year, supporting a maximum lithium concentrate capacity of up to 1.5 million mt; once CGP3 has fully ramped up, it will add roughly 500,000 mt of additional concentrate capacity. With the mine life further extended to 2045, Greenbushes not only possesses low-cost advantages but also strong long-term supply capability. This is why Greenbushes has demonstrated significant resilience during the lithium price downturn. From 2024 to 2025, as lithium prices continued to pull back, many high-cost Australian mines and Chinese lepidolite projects faced pressure to suspend or cut production, yet Greenbushes maintained relatively sound profitability and continued to advance the CGP3 expansion. It represents not the industry's average cost, but the most competitive end of the global hard-rock lithium ore cost curve. Therefore, Greenbushes serves as a useful benchmark for observing the industry bottom. When lithium prices fall, high-cost capacity exits first, while low-cost capacity continues to produce. The closer prices move to Greenbushes' cost range, the fewer marginal units of capacity can sustain normal operations in the market, and the nearer supply exits are to completion. Greenbushes Has the Largest Production, but Limited Free-Float Volume Although Greenbushes has a very large production scale, relatively little of its concentrates can enter the spot market directly. Greenbushes is operated by Talison Lithium, whose shareholders include TLEA and Albemarle, with TLEA jointly held by Tianqi Lithium and IGO. The spodumene concentrates produced at the mine are primarily allocated under shareholder offtake arrangements, flowing to lithium chemical production lines within the shareholder systems of Tianqi, Albemarle, and others, and are not normally offered for direct sale to the market. Viewed through the framework of [Resources – Designed Capacity – Actual Production – Saleable Volume – Available Spot Volume], Greenbushes is a very typical case. Its actual production ranks among the world's largest, but since most of its concentrates are locked up within its shareholder system, the volume truly available for market-based transactions is relatively limited. This also means Greenbushes' influence on market prices is mostly indirect. On one hand, it defines the scale of global low-cost lithium resource supply, which has an important impact on the lithium chemical cost curve; on the other, its operating costs, offtake pricing, and expansion pace also serve as key references for long-term lithium ore contract negotiations and price assessments. By contrast, what really influences spot lithium ore prices in the short term are typically the marginal resources not fully locked up by shareholder offtake agreements and needing to find buyers on the market. These include some Australian mines, African lithium ore, and saleable cargo held by traders. Therefore, while the addition of approximately 500,000 mt of concentrate capacity at Greenbushes will alter medium and long-term supply-demand expectations, its short-term impact on the spot market may not be particularly pronounced. In contrast, the suspension or resumption of a marginal mine with an annual output of over 100,000 mt that primarily sells on the open market could rapidly influence spot quotes and market sentiment. It is well known that short-term prices are not entirely determined by total output; rather, they depend more on the volume of material freely available for trading in the market. For example, lithium carbonate's price elasticity hinges more on the current available volume in the market. The mine with the largest output does not necessarily hold the most direct pricing power in the spot market; what truly dictates short-term marginal prices are typically resources that are available, negotiable, and require immediate transaction. However, shareholder offtake does not mean such concentrates are completely isolated from the market. When smelters within the frameworks of shareholders like Tianqi and Albemarle reduce their operating rates, or when some smelting lines operate erratically, concentrates originally intended for internal consumption may indirectly enter the market through toll processing, resales, or inventory adjustments. These cargoes are usually not publicly tallied but affect the actual circulating volume in the lithium ore market. Their tracking requires assessment by combining shareholder smelter operating rates, concentrate inventory, toll processing arrangements, and import flows. In analyzing Australian ore supply, such shadow spot cargoes are often harder to observe than a mine's nominal production, yet can significantly influence the market during specific phases. SC6 and Lithium Chemicals: Transmission Direction Reversed Once Within a Year The price transmission relationship between Australian ore concentrates (SC6, CIF China) and China's lithium chemicals has completed a full round trip over the past year. In H1 2025, ore prices followed the downtrend. In Q1, Australian mines aggressively cut costs but did not reduce production, showing a strong willingness to sell. SC6 fell all the way to around $620/mt, and the lower concentrate prices, in turn, pressured lithium chemicals downward, forming a spiral. The market's concern at the time was: When would mines finally be willing to cut? The situation reversed starting at the end of Q3. The announcement of Yichun's plan to cancel 27 mining rights, along with the suspension at Jianxiawo, tightened expectations for domestic resource supply. Lithium chemical prices moved first, and SC6 followed with an uptrend that proved even more elastic—by December, the average price had already returned to around $1,300/mt. Formula pricing, linked to lithium chemical prices, allowed the mining side to capture the bulk of the upside gains, while the tolling margins of Chinese smelters were instead compressed. Meanwhile, the impairment and expansion adjustments at the Kwinana project reflect that lithium chemical conversion in Australia continues to face high hurdles in terms of cost control, production ramp-up, and operational stability. TLEA's Kwinana lithium hydroxide plant was fully impaired in mid-2025, with the second-phase construction halted, and IGO has clearly shifted its priority to mining. The role of Australian ore in the industry chain has been refixed as a supplier of concentrates, and the linkage between SC6 and Chinese lithium chemical prices will only tighten going forward, not decouple. The implied smelting margin—calculated by multiplying SC6 by the processing coefficient and comparing it to spot lithium chemical prices—has turned negative, meaning Chinese smelters using externally purchased ore are losing cash. Either ore prices must pull back or lithium chemical prices must rise; one of the two is inevitable. This indicator is the most powerful gauge of whether mines or lithium chemicals hold more pricing power. Australian Mine Production Resumptions: Price Breaks Through the Ceiling The key words for Australian ore in 2024-2025 were market exits, while in 2026 they have become revivals. Lithium prices have been climbing steadily since the beginning of the year, with futures prices once surpassing 200,000 yuan/mt, triggering a series of production resumptions in May and June: Project Action Timing Notes Bald Hill (MinRes) Resumed production after an 18-month shutdown Announced in May, first concentrates expected in Jul Restart cost approximately A$20 million Ngungaju Plant (PLS) Restart Planned for Jul Resuming roughly 200,000 mt/year Finniss (Core Lithium) FID approved, financing secured Targeting first ore in Q3 Financing approximately $205 million Kathleen Valley (Liontown) Evaluating expansion In progress — Mt Cattlin (Rio Tinto) Remains shut down From Mar 2025 to present Restart conditions not yet clarified Looking at these cases together, the real threshold for resuming production is more complex than simply having prices exceed cash costs. Bald Hill took only about two months from announcement to first ore because it had maintained a production-ready state throughout the shutdown, and MinRes's own mining services division could internally mobilize all operations—mining, crushing, and transport—without needing to wait for external contractors. Assets of this type are the quickest-responding supply when prices rise. Finniss, by contrast, was an entirely different situation: it first sold inventory to Glencore in exchange for liquidity, then cobbled together three financing instruments—convertible bonds, debt, and a share placement—before reaching FID. For mines with fragile balance sheets, resuming production is not an operational decision but a financing event; what low-price cycles destroy is not resources, but financing capacity. The market consequences of the resumption wave are already visible. Lithium carbonate hit a two-year high of 200,500 yuan/mt on May 13, then pulled back to the 160,000–170,000 yuan range in June, partly because the market saw resumption supply coming back. The logic is straightforward: when prices rise, idle capacity resumes production, supply expectations increase, and prices pull back. That list of idle capacity in Australia, when sorted, essentially forms the supply curve above lithium prices. The CGP3 fire and this wave of production resumptions are actually two sides of the same market: disruption to the incremental supply at the far left of the cost curve is bullish, while idle capacity at the right end accelerating its return is bearish. Looking at lithium prices this year from the resource perspective, equilibrium is being sought between these two forces. Lithium prices in 2026 are expected to fluctuate more frequently, but one-sided market moves will be shorter. After prices rise, what truly caps the height of the rally is the speed at which idle capacity re-enters the market. Projects under care and maintenance or on standby, such as Bald Hill, Finniss, and Ngungaju, essentially constitute elastic supply above lithium prices. When lithium prices return above the cash costs of these projects and stay there long enough, mines have the incentive to resume production. But production resumptions do not happen instantly. From the announcement of a restart to the rehiring of personnel, equipment maintenance, resumption of mining and processing, inventory buildup, and finally, the entry of concentrates into the market, it typically takes from two months to several quarters. This time lag is the window during which supply disruptions can drive prices higher. The suspension at Jianxiawo and the CGP3 fire at Greenbushes were able to affect market sentiment not because of a sudden global shortage of lithium resources, but because of a reduction in short-term available supply while idle capacity had yet to return. Compared to the previous cycle, it is worth noting that the window for risk premiums arising from resource-side disruptions is shortening. A growing number of mines are opting for care and maintenance rather than permanent closure; mining service companies, traders, and downstream enterprises are also participating in restart financing and offtake arrangements. As long as prices return above the break-even line, some idle capacity can resume more quickly. This means that in the future, lithium prices may still rise rapidly following supply disruptions, but the duration and height of one-sided market moves will be more easily constrained by production resumption expectations. Prices may not necessarily become more stable, but supply feedback could be faster. SMM New Energy Analyst Yang Le

It is worth noting that with the gradual ramp-up of large cylindrical battery production, the share of 9-series materials is rising rapidly both domestically and internationally.

Korean battery materials company EcoPro has officially commenced mass production of high-nickel cathode materials at its plant in Debrecen, Hungary, and has completed its first shipment, marking a significant step in the operationalization of its localized European strategy. The facility primarily produces high-nickel NCA cathode materials for electric vehicles, with initial deliveries already made to European automotive OEMs. Covering an area of approximately 440,000 square meters, the project integrates cathode material production, lithium hydroxide processing, and industrial gas supply. It has an annual production capacity of around 54,000 tonnes of cathode materials, sufficient to support approximately 600,000 electric vehicles. The company stated that it will use this launch as a starting point to gradually ramp up production and plans to supply more global automakers within the year, while also advancing the development of NCM product lines to meet diverse customer needs in Europe. Looking ahead, EcoPro is considering the construction of a second plant based on order visibility, which could more than double the site’s total capacity.

June 10, 2026 – Recently, the Shengde Erdengtu hydrogen energy storage station in Huade County, Ulanqab City, 90MW/360MWh electrochemical energy storage unit was successfully connected to the grid and put into operation, marking the official entry of China’s first grid-side “electrochemical energy storage + hydrogen energy storage” independent demonstration project into the commercial operation phase. The project was jointly developed by China Hydrogen Energy Group Co., Ltd. and Shanghai Xinran Compressor Co., Ltd., leveraging domestic core hydrogen energy equipment to empower the construction of long duration energy storage (LDES) systems, supporting Inner Mongolia in building a safe and efficient new-type power system model project. According to the project planning scheme, the ESS power station has an overall total installed capacity of 100MW/400MWh , adopting a phased commissioning mode. Currently, the 90MW/360MWh electrochemical energy storage section has been connected to the grid for power generation first, while the remaining 10MW/40MWh hydrogen energy storage system has entered the final stage of equipment integrated commissioning. Among them, the full set of domestic core equipment including hydrogen compressors supplied by Shanghai Xinran has been fully installed, laying a solid hardware foundation for the project to achieve long-cycle, large-capacity green hydrogen energy storage operation. As a national-level key demonstration project for energy transition, the project innovatively created a short-duration electrochemical energy storage + long-duration hydrogen energy storage complementary operation mode, establishing a multi-level and multi-dimensional energy storage system featuring “second-level response, hour-level regulation, and cross-day and cross-seasonal storage,” effectively addressing industry pain points such as the intermittency, fluctuations, and difficulty in absorbing new energy generation. Among them, the electrochemical ESS can achieve millisecond-level fast frequency regulation, leveling out fluctuations in wind and solar power output in real time, ensuring instantaneous grid stability; the hydrogen ESS relies on the core equipment of the Xinran XR-3.8/(10-15)-29 hydrogen compressor to convert surplus new energy electricity from the grid into green hydrogen storage, with cross-seasonal and long-cycle energy dispatch capabilities, making up for the application shortcomings of conventional short-duration energy storage. Located in Huade County, Ulanqab City, Inner Mongolia, the project benefits from abundant local wind and PV resources, providing high-quality clean energy support for large-scale green hydrogen production. On-site, the integrated commissioning of Xinran hydrogen compressors, hydrogen storage tanks, electrolyzers, and other core equipment has been completed, opening up the entire closed-loop industry chain of hydrogen production, compression, storage, and power generation . To cope with Inner Mongolia’s extreme conditions of severe cold and sandstorms, both parties jointly optimized and iterated equipment performance, achieving 100% independent and controllable core components and completely eliminating reliance on imports of similar equipment. The equipment can operate stably in -30°C extremely cold environments , setting a benchmark for the localisation of hydrogen energy equipment and its adaptation to extreme operating conditions. In terms of environmental protection and industrial benefits, the project boasts prominent advantages. After full-scale commercial operation, it can absorb over 500 million kWh of new energy electricity annually, reducing standard coal consumption by roughly 150,000 mt and CO2 emissions by 400,000 mt, achieving remarkable ecological emission reduction results. Meanwhile, the high-quality green hydrogen produced can be widely used as industrial raw materials, transportation fuel, and district heating, spurring the cluster development of green chemical industries such as green ammonia and green methanol, and helping Inner Mongolia build a national demonstration base for new energy equipment manufacturing and green hydrogen production and application. The successful grid connection of this electricity-hydrogen hybrid energy storage project fully verifies the feasibility and practicality of the electricity-hydrogen coupling energy storage technology route, offering a replicable and scalable practical model for the construction of new-type power systems nationwide. The industry chain synergy model between China Hydrogen Energy Group and Shanghai Xinran Compressor also provides an excellent case for industry-university-research-application collaboration and upstream-downstream integrated innovation in the hydrogen ESS sector. With the subsequent official operation of the hydrogen energy storage system, the project will be upgraded into a comprehensive energy hub integrating grid peak shaving and frequency regulation, LDES, and green hydrogen production, continuously delivering the mature "Inner Mongolia Solution" for new energy consumption and green transformation of the energy structure.

Developing local processing capacity is not simply a matter of building another plant next to a mine. It requires a country to simultaneously possess reliable energy supply, logistics infrastructure, chemical-industry capabilities, engineering expertise, customer qualification systems, access to financing, policy continuity and transparent pricing mechanisms. Resources can attract investment, but they cannot guarantee project success.

Consumer battery cell manufacturers are generally adopting a wait-and-see attitude, expecting further declines in raw material prices. A few manufacturers have made small-batch restocking purchases, while most are waiting for prices to drop further.

Around May 23, 2026, import and export data for cobalt and lithium battery industry chain-related products in April were released in a concentrated manner. Data showed that China's spodumene imports in April reached 758,000 mt in physical content, down 9.5% MoM and up 21.7% YoY. Lithium carbonate imports, China imported 32,650 mt of lithium carbonate in April, up 9% MoM and up 15% YoY.......SMM compiled the import and export data for battery materials, as detailed below: Upstream Lithium Concentrates In April 2026, China's spodumene imports reached 758,000 mt in physical content, down 9.5% MoM and up 21.7% YoY, equivalent to approximately 63,000 mt of LCE. Customs data showed that April spodumene imports pulled back MoM from March, reaching 758,000 mt in physical content. By source country, Australian ore port arrivals returned to a relatively normal level, with over 350,000 mt arriving this month, up 38.9% MoM; Zimbabwe's earlier shipments arrived at port this month at 102,000 mt, down 9.2% MoM; South Africa and Nigeria saw some contraction in monthly port arrivals, while ore from Mali had almost no notable port arrivals this month due to shipping schedule impacts. Notably, spodumene powder sold by Brazil in early 2026 arrived at port this month, driving a significant increase in port arrivals from this country. Additionally, after SMM screening, the month's incoming ore was equivalent to 63,000 mt of LCE. Among the incoming ore, lithium concentrates accounted for 67%, edging down MoM, mainly because apart from Australia , ore from other source countries contained some relatively low-grade ore. Source: China Customs, compiled by SMM Spodumene concentrates (CIF China) spot pricing, according to SMM spot pricing, spodumene concentrates (CIF China) spot prices fluctuated upward in April. As of April 30, spodumene concentrates (CIF China) spot prices rose to $2,540/mt, up $221/mt from the month-end price of $2,313/mt in March, a gain of 9.81%. According to SMM, lithium carbonate prices continued to rise in April, and spodumene concentrates prices rose in tandem with salt prices, with gains exceeding those of lithium carbonate itself, causing non-integrated enterprises that purchase externally spodumene concentrates to suffer losses, with spot profitability remaining in deficit. In April, spot circulation of lepidolite concentrates relatively eased. Meanwhile, as lithium carbonate prices rose, processing fees for non-integrated enterprises also increased accordingly, preserving a certain profit margin for their processing operations and enabling these enterprises to achieve spot profitability. However, recently, spodumene concentrates prices adjusted in tandem with lithium carbonate price fluctuations, and the price center shifted downward. According to SMM's latest findings, disrupted by rumors of production resumptions at Jiangxi mines this week, lithium carbonate futures and spot prices declined, further dragging down the overall price center. Currently, lithium mines showed a weak willingness to make shipments, and transactions were mostly concentrated between traders and buyers. Port lithium ore inventory continued to decline. Going forward, attention should still be paid to the potential tight lithium ore supply triggered by high operating rates in the lithium chemicals industry. Lithium ore prices were expected to continue to hold up well. Lithium Carbonate According to customs data, China imported 32,650 mt of lithium carbonate in April, up 9% MoM and up 15% YoY. Of this, 21,000 mt was imported from Chile (65% of total imports), 9,555 mt from Argentina (29%), and 1,100 mt from Indonesia (3%). From January to April, China's cumulative lithium carbonate imports reached 116,000 mt, up 47% YoY cumulatively. In April, China exported 370 mt of lithium carbonate, down 17% MoM and down 50% YoY. From January to April, China's cumulative lithium carbonate exports totaled 1,886 mt, up 7% YoY cumulatively. In April, China imported 17,942 mt of lithium sulfate, up 9% MoM and up 296% YoY. From January to April, China's cumulative lithium sulfate imports reached 58,900 mt, up 121% YoY cumulatively. According to SMM spot quotes, spot lithium carbonate prices generally trended upward in April. As of April 30, the spot lithium carbonate price rose to 177,000 yuan/mt, up 14,000 yuan/mt from 163,000 yuan/mt on March 31, a gain of 8.59%. According to SMM analysis, China's lithium carbonate prices followed a "V-shaped" trend in April, first declining then rising, with the monthly average price up 6% MoM. In the first ten days, geopolitical disruptions in the Middle East intensified global risk-averse sentiment, causing non-ferrous metals and lithium carbonate prices to fluctuate downward. In the mid-to-late period, driven by Zimbabwe's export ban, Jiangxi mine license renewals, and rising costs, prices began to rebound and fluctuate upward, with the price center shifting notably higher by month-end. Upstream and downstream purchasing remained stagnant, with the psychological price spread widening week by week. Upstream producers held prices firm and held back from selling, maintaining high offer prices, while downstream buyers made just-in-time procurement only, with psychological price levels concentrated at 155,000-175,000 yuan/mt, restocking on dips only when prices fell rapidly. In April, spot battery-grade lithium carbonate prices dropped to around 155,500 yuan/mt in the first ten days, then rallied all the way to 177,000 yuan/mt by month-end. As of May 29, domestic spot battery-grade lithium carbonate was quoted at 174,000-181,000 yuan/mt, with an average price of 177,500 yuan/mt. Lithium Hydroxide According to customs data, in April 2026, China imported 6,689 mt of lithium hydroxide, up 9% MoM and up four times YoY. Of this, 2,252 mt were imported from South Korea, accounting for 34% of total imports; 1,706 mt came from Indonesia, accounting for approximately 25% of imports; and the remaining 40% came from Australia and Chile. In April, China exported 5,535 mt of lithium hydroxide, up 76% MoM and up 31% YoY, of which 3,915 mt were exported to South Korea and 864 mt to Japan. Continued sluggish ternary cathode material output outside China limited the absorption capacity for lithium hydroxide in markets outside China, resulting in a slight surplus in markets outside China, which in turn widened the price spread between domestic and overseas markets. Meanwhile, as suppliers outside China had previously signed long-term supply agreements with domestic traders, they were able to continuously dump lithium hydroxide into the Chinese market. Under the combined effect of these factors, the trade pattern of lithium hydroxide continued to reverse (shifting from net exports to net imports). Source: China Customs, compiled by SMM Battery Materials LiPF6 According to China Customs data, in April 2026, China's cumulative LiPF6 exports totaled approximately 868 mt, down approximately 80.9% MoM, while cumulative imports were approximately 96 mt. Export side, China's LiPF6 exports in April 2026 were approximately 868 mt, down approximately 80.9% MoM from March and down approximately 33.2% YoY. Specifically, as the LiPF6 export VAT rebate policy was officially abolished starting April 1, 2026, enterprises rushed to export in advance in March, and electrolyte enterprises outside China built up certain inventory, leading to MoM declines in China's exports to multiple major destination countries in April. Exports to Poland were 337.5 mt (down approximately 80.4% MoM), South Korea 81.804 mt (down approximately 92.56% MoM), Czech Republic 150 mt (down approximately 67.43% MoM), and the US 101.908 mt (down approximately 61.7% MoM). Only exports to Japan increased — 191.37 mt (up approximately 50.77% MoM). Artificial Graphite In April 2026, China's artificial graphite imports were 757 mt, up 12.4% MoM and down 32.9% YoY. Average import price side, in April 2026, the average import price of artificial graphite in China was 75,941 yuan/mt, up 23.1% MoM and up 14.6% YoY. In April 2026, China's artificial graphite exports totaled 45,895 mt, up 22.3% MoM but down 21% YoY. In terms of average export price, in April 2026, the average export price of China's artificial graphite was 9,214 yuan/mt, down 6.6% MoM but up 0.26% YoY. Exports from the top five exporting provinces rose 21% MoM from the previous month, with two provinces seeing export volume increases of over 35% MoM, and another province recording a 20% MoM increase. Import market, orders from downstream power battery enterprises in China gradually recovered in April. Combined with the phased tightness in spot capacity of leading anode enterprises, restocking demand was released, boosting artificial graphite imports to rebound from weakness on a MoM basis. However, import volumes remained down YoY, primarily because China's anode industry had ample overall capacity with supply still in surplus, domestic self-sufficiency continued to strengthen, and the industry's reliance on imported raw materials and finished products steadily declined. Flake Graphite In April 2026, China's flake graphite imports totaled 3,178 mt, down 19% MoM and down 45% YoY. Data source: China Customs, SMM In April 2026, China's flake graphite exports totaled 4,093 mt, down 50% MoM and down 54% YoY. Export market, the flake graphite export tax rebate policy was officially canceled this month, directly squeezing profit margins for foreign trade enterprises and significantly dampening overall export willingness. Meanwhile, the approval pace for flake graphite export licenses slowed down, hindering foreign trade shipments processes. Coupled with weak ex-China end-use demand, multiple bearish factors combined to directly drive a sharp decline in industry export volumes. The import market also continued to weaken. Goods originally intended for exports shifted to domestic sales circulation, with increasingly abundant local supply sources in China. Market enthusiasm for import procurement was insufficient, ultimately causing imports to decline in tandem this month. Phosphate Ore On May 20, 2026, according to customs data, China's phosphate ore imports totaled 207,000 mt in April 2026. April imports rose 13.5% from 182,000 mt in March. Total import value in April was $19.741 million, up 35.7% MoM from $14.552 million in March. The average unit price was $95.5/mt, up 19.6% from $79.9/mt in March. Import commentary: In May, Egypt's phosphate ore exports faced "policy tightening and weakening demand."On May 13, Egypt's Ministry of Petroleum and Mineral Resources announced that it would no longer sign any new phosphate ore export contracts. Previously, Egyptian Prime Minister Mustafa Madbouly stated clearly at a meeting on May 10 that the government was pushing for a transition from raw material exports to the manufacturing of high-value-added products such as phosphate fertiliser. Already signed long-term contracts would not be affected. This is expected to push up import prices and may affect imports. Cobalt Cobalt Hydrometallurgy Intermediate Products In April 2026, China's cobalt hydrometallurgy intermediate products imports were approximately 1,247 mt in physical content, down 26% MoM and down 98% YoY. Among them, imports from the DRC were approximately 945 mt in physical content, down 43% MoM and down 98% YoY. In April 2026, the average import price of China's cobalt hydrometallurgy intermediate products was $17,187/mt in physical content, up 2.63% MoM. It was learned that most miners had completed the Q4 2025 quota approvals, but the Q1 2026 quota approvals slowed down again due to sampling, detection and other procedural issues. In addition, transportation capacity in the DRC was tight. Fleets, driven by economic considerations, prioritised the transport of oil products and chemicals that were in production shortage, followed by other metals with shorter turnover cycles, and cobalt among non-ferrous metals came last, meaning cobalt faced significant transportation capacity issues. Constrained by the above factors, miners mainly focused on building in-transit inventory and had not yet arranged concentrated vessel bookings, and the arrival of large batches of intermediate products at ports may continue to be delayed. Unwrought Cobalt In April 2026, China's unwrought cobalt imports were approximately 1,334 mt, up 39% MoM and up 59% YoY. In April, refined cobalt imports mainly came from Indonesia, Russia, and Madagascar, with imports of 462 mt, 457 mt, and 182 mt respectively. The main reason for the increase this month was that domestic smelters lacked intermediate product raw materials and imported cobalt slabs and cobalt briquettes for re-dissolution to ensure normal production. In terms of average import prices, the average import price of China's unwrought cobalt in April 2026 was $52,724/mt, up 4.72% MoM. Cumulative imports from January to April 2026 totalled 5,916 mt, up 153% YoY cumulatively. Export side, China's unwrought cobalt exports in April 2026 were approximately 218 mt, down 47% MoM and down 95% YoY. By country, China's exports to the US dropped significantly, with April exports to the US at 35 mt, down 87.5% MoM. The main reason was that demand for alloy-grade refined cobalt in the US pulled back in April, and ex-China branded refined cobalt was already sufficient to meet regional demand, with some refined cobalt traders redirecting their destinations from the US back to China. Average export price, the average export price of China's unwrought cobalt in April 2026 was $54,590/mt, up 5.80% MoM. Cumulative exports from January to April 2026 totaled 1,792 mt, down 76% YoY.

According to Chinese customs data, in April 2026, China imported 6,689 tonnes of lithium hydroxide, up 9% month-on-month and fourfold year-on-year. Among this, 2,252 tonnes came from South Korea, accounting for 34% of total imports; 1,706 tonnes from Indonesia, representing about 25%; and the remaining 40% from Australia and Chile. In April, China exported 5,535 tonnes of lithium hydroxide, an increase of 76% month-on-month and 31% year-on-year. Of this, 3,915 tonnes were exported to South Korea and 864 tonnes to Japan. Ongoing weak output of overseas ternary cathode materials has limited their ability to absorb offshore lithium hydroxide, leading to a modest oversupply in overseas markets and widening the price gap between domestic and international markets. At the same time, due to previously signed long-term supply agreements between overseas holders and Chinese traders, overseas holders have been able to continuously dump lithium hydroxide into the Chinese market. Taken together, these factors have driven a sustained reversal in the lithium hydroxide trade pattern (from net export to net import).

Vulcan Energy has officially achieved Financial Close for its €2.2 billion Lionheart Project financing arrangements, unlocking the remaining balance of its equity and debt package. Located in the Upper Rhine Valley between Germany and France, Lionheart is a landmark integrated lithium and renewable energy initiative. The project targets an annual production capacity of 24,000 tonnes of lithium hydroxide monohydrate (LHM), sufficient to power roughly 500,000 electric vehicles per year, alongside 275 GWh of renewable power and 560 GWh of heat over a 30-year lifespan. Following a positive Final Investment Decision and the start of construction in late 2025, reaching Financial Close secures the sequential drawdowns needed to keep the project on track and on budget.