Chinese miner Zangge Mining, controlled by state-owned giant Zijin Mining, has announced a suspension of lithium production at its facility in Qinghai province following directives from local government officials, reported Reuters.

The miner received a notice from Haixi prefecture authorities demanding an immediate stop to non-compliant mining activities, as per a Shenzhen exchange filing. The specific reasons for non-compliance were not disclosed in the filing.

Zangge Mining had projected its lithium carbonate production to reach 11,000 tonnes (t) this year.

However, operations can only recommence upon receiving approval from the local government. The company has indicated its intention to align its mining operations with compliance standards and to apply for a resumption of production.

Zangge Mining stated: "Since it is not yet possible to determine the specific time of Zangge Lithium's resumption of production, the impact on the company cannot be predicted for the time being.”

This uncertainty has contributed to volatility in the lithium market, leading to a significant increase in lithium prices.

The most actively traded lithium carbonate futures contract on the Guangzhou futures exchange saw a sharp increase to nearly a three-month high following the news of the production halt.

The news has positively influenced market sentiment for the critical electric vehicle battery material.

Despite the production halt, Zangge Mining anticipates that the impact on its financial results will be minimal.

The company expects to produce approximately 5,350t of lithium in the first half of the year.

Zijin Mining acquired a controlling stake in Zangge Mining in May 2025, part of its strategy to expand in the lithium market.