Pinned straw:
Good article copied with credit from AFR. Enjoy!!
Lithium rebound fuels hope for mothballed mines’ revival
Mark Wembridge
Jan 18, 2026
A near-quadrupling of lithium prices over the past six months has buoyed hopes that the swath of mines shuttered during the extended downturn will reopen.
Australian lithium miners have endured a rocky past few years, as a potent cocktail of oversupply and sluggish demand depressed prices below profitable levels and forced mines to close.
However, the price for a tonne of 6 per cent spodumene – the type of lithium predominantly mined in Australia – has rebounded to beyond $US2000 a tonne, up from $US575 in June.
Almost all of Australia’s hard rock lithium producers are loss-making when prices fall below $US1000 per tonne, except Greenbushes, the world’s largest lithium mine operated by China’s Tianqi and New York-listed Albemarle.
The improving price for the key battery mineral has the potential to spark a lithium renaissance similar to that seen following gold’s record run – a phenomenon that encouraged a series of previously uneconomic gold mines to reopen.
Among the operations that could be considered for reopening are Mineral Resources’ Bald Hill, Arcadium Lithium’s Mt Cattlin, PLS’s Ngungaju, and Core Lithium’s Finniss project.
Liontown Resources may also consider increasing production at its flagship Kathleen Valley lithium mine, which was sustained during the lithium downturn by a $363 million fundraising in August, $50 million of which came from taxpayers.
“At $US2000 per tonne or above, you’re at a level that is above the consensus average of what the long-term price needs to be for the market,” said Dale Henderson, chief executive of Western Australia-based player PLS. “At these levels, a whole number of assets become profitable.
“Others have characterised [the rebound] as a ‘lithium boom 3.0’. I would be cautious about labels like that. What we’re seeing is more of a necessary rebalance in the market coming [to] unsustainable lows.”
The tightening supply was initiated in August when Beijing suspended production at a major mine run by Chinese lithium powerhouse Contemporary Amperex Technology.
Since then, Beijing has initiated a broader crackdown on mining compliance that has further squeezed supply.
Inventories for Chinese manufacturers have tightened, and a boom in battery storage has helped send prices to levels not seen since 2023. Artificial intelligence is playing its part as lithium batteries help support the data centres powering AI, which is booming globally.
Easing supply glut
The sudden surge in demand has coincided with signs that a supply glut, which has plagued the industry for years, is easing.
“The rally has been driven by consistent destocking of lithium chemicals in China as lithium-ion battery production has continued to surprise the market to the upside, particularly energy storage system battery shipments,” said Glyn Lawcock, head of resources research at Barrenjoey.
The Sydney-based brokerage is one of the most bullish on lithium, forecasting the battery material to hit $US3250 a tonne this year.
“Pricing agencies have pointed to improved demand across the lithium supply chain,” said Barclays analyst Stuart Howe.
“Global passenger electric demand growth continues, energy storage system demand has become more material and recent stimulus measures are key drivers, such as China’s car replacement subsidy. The moves suggest that inventory levels across the supply chain have normalised.”
The market was flooded with lithium in 2022-23 when prices topped $US8000 per tonne, prompting Chinese and Australian mines to accelerate production in the expectation of massive demand from battery and electric vehicle makers.
China controls the lithium market, processing and consuming the majority of global supply. As the price rises, China may decide to resume shuttered lithium operations, according to Hayden Bairstow, head of research at Perth-based brokerage Argonaut.
“The volatile price outlook is expected to coincide with supply restart announcements, largely in WA and China,” Bairstow said.
“The ever-expanding demand outlook for battery energy storage systems combined with continued strength in electric vehicle sales has further enhanced the near-term fundamental outlook for lithium,” he said.
Reopening mines
PLS’s Henderson warned that reopening mines could take months and that price volatility made it difficult to decide whether to restart production.
“Last December, there was talk of one of the Chinese mines coming onstream, and then coming off again,” he said. “Each time there was that kind of news flash, pricing responded overnight. We have this dynamic of sentiment-driven pricing, and that’s largely owed to the fact that the market is immature and the mechanisms to guide pricing are yet to be built.”
Core Lithium, one of the smaller operators, is tipped to restart its Finniss mine this year. MinRes declined to comment.
A consistent price of about $US1200 to $US1300 per tonne would change the equation and spur a jump in production, analysts said.
“We continue to forecast relatively short price cycles for spodumene, with the assumed supply side response expected to see prices retreat below US$2000 per tonne during 2027 before climbing again in 2029,” Bairstow said.
“It is likely that new supply announcements and restarting of existing capacity, combined with inventory cycles in China will see increased price volatility.”
The price rebound has also pushed up share prices in Australian lithium miners, squeezing out short sellers – traders who profit when a stock falls in value.
MinRes, PLS and Liontown were once regulars in the ASX’s handful of most shorted stocks. Today, only PLS scrapes into the top 20, according to market data site Shortman.
This is the exact reason why I don't avoid stocks that are highly shorted (using PLS as an example >15%). When the tide turns, many shorters (investors? Nah) risk getting stuck in the mud; a dangerous game to play on the share market.
My thesis remains as it has been for over a year for PLS. Market leaders, can produce cheaper than most others, they own their assets and have a shit load of cash. I have been impressed with their management team during this downturn too. Increasing production capacity and investing in a future that hopefully won't be so grim. But no silly/irrational decision making, at least in my opinion.
I agree that perhaps we have reached the point where the bottom is behind us. But perhaps we haven't. Who knows. I am comfortable though that tomorrow will eventually look better than it does today, and PLS will be stronger for it when that day arrives.
Waiting patiently I shall continue.
I'll go out on a limb and say that with western govs looking to prop (e.g. LTR raise), China is seemingly pivoting its lithium rationality to financial sustainability as it won't be able to squeeze out ex-China supply, the nadir for this cycle is now or just behind us. In that cash, significant further downside risk in lithium is low probability now which means returns are asymmetric to the upside again. As such, it makes lithium an intresting space to once again deploy capital.
