Supply Disruption Creates Opportunity for Lithium Co. as Prices Rally

1. Atlas Lithium Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Atlas Lithium Corp.
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The prices of lithium and lithium equities rallied early this week on unexpected news that Chinese regulators shuttered operations at the Jianxiawo lepidolite (a lithium-bearing mineral) mine due to owner noncompliance with permitting requirements.

"The current situation underscores lithium's emergence as a truly strategic commodity in the global transition to electrification, where supply disruptions can trigger immediate and substantial market reactions across multiple industries and continents," wrote Mark Reichman, Noble Capital Markets research analyst, in an August 11 research report.

After the news, on Monday alone, the lithium spot price rose nearly 4%, and lithium producers saw their share price increase between about 9% and 20%, reported Reichman. Spot lithium was US$10,850 per metric ton at the close of trading on Tuesday, Aug. 12, up 8.5% from US$10,008 at the end of last week.

The impact, if any, the Jianxiawo shutdown will have on the global lithium oversupply is hard to quantify, given the unknowns surrounding the duration of the closure. According to Benchmark in an Aug. 12 article, lithium prices' gain this week primarily was due to sentiment and reflects the speculative nature of lithium trading in the Asian country.

MST Financial attributed the price movement to supply concerns amid speculation that Jianxiawo could be closed for much longer than the three months its owner, Contemporary Amperex Technology Co. Ltd. (CATL:ASX), announced, as long as a year, reported Stockhead on Aug. 11. CATL is China's largest lithium battery producer. Dr. Cam Perks, Benchmark lithium product director, told Stockhead the mine is too important to the local economy, providing 30% of supply to the area's lithium refineries, to remain closed for a significant time period.

"The fundamentals are really still very strong, and these are anchored in some very powerful, megatrends that we see developing within the global economy: the urgent drive for climate change mitigation, the once in a generational shift in the global energy system and also the rise of energy intensive technologies such as artificial intelligence," 

Jianxiawo's annual production of lithium carbonate equivalent, about 46,000 metric tons, is equal to about 3% of the global output forecasted for this year, Australian government data show, reported Reuters on Aug. 11.

Thus, Reichman noted, "For investors, the situation presents both opportunities and uncertainties. While the immediate supply shock has benefited lithium stockholders, the underlying fundamentals of oversupply that had previously pressured prices remain largely unchanged."

This oversupply has persisted throughout the past 18–24 months, according to an Aug. 11 Discovery Alert article. It resulted from a large amount of capacity and production expansion during the 2011-2022 bull market. New technological advances in lithium mining bolstered output at existing operations. The oversupply conditions are still in play; global lithium production capacity is estimated to still exceed demand throughout 2025 by about 100,000–150,000 tons.

"One mine suspension alone is unlikely to rebalance the market," the Discovery Alert article read. "The market will likely require multiple quarters of coordinated production restraint before a sustainable uptrend can develop."

In contrast, Barry Dawes, executive chairman of Martin Place Securities, wrote in an Aug. 11 note that the needed adjustment to reduce inventory levels has happened, the lithium market has bottomed, and more than half of lithium production costs are higher than the current lithium price. Underlying demand growth is strong, and with that, prices are poised to move higher. In other words, a new lithium bull market is underway.

"Lithium has been the most hated sector in the market for some time," wrote Dawes. "The wheel turns."

Investing News Network (INN) wrote in a July 21 article that long-term fundamentals "promise sustained demand growth into the next decade." Now, with digitalization (data centers) and renewable energy integration (battery energy storage systems) requiring lithium in addition to electric vehicles (EVs), demand for the metal has picked up, remains strong, and is expected to rise.

According to a BloombergNEF report in June, global EV sales are predicted to reach 22 million (22M) in 2025, up 25% from last year due to lithium-ion batteries being less expensive and greater availability of more affordable EV models.

Total global demand for lithium carbonate equivalent, reported Statista, could reach about 2,500,000 metric tons by 2030, up from 292,000 metric tons in 2020.

"The fundamentals are really still very strong, and these are anchored in some very powerful, megatrends that we see developing within the global economy: the urgent drive for climate change mitigation, the once in a generational shift in the global energy system and also the rise of energy intensive technologies such as artificial intelligence," Paul Lusty, head of battery raw materials research at Fastmarkets, said about lithium at a July conference, INN reported.

A more favorable lithium market, including higher prices of the metal, could benefit companies in the lithium mining space. Here's a look at one U.S.-based lithium developer:

Atlas Lithium

Atlas Lithium Corp. (ATLX:NASDAQ) is advancing its fully permitted Neves Lithium Project in Brazil. On August 4, 2025, the Company released its Definitive Feasibility Study (DFS), a nearly 500-page comprehensive technical report that establishes the foundation for the project's anticipated strong financial returns. The study projects an 11-month payback period, a 145% internal rate of return, and a net present value exceeding $539 million. Additional details are available in the Company's DFS filing with the SEC.

"With Atlas' low-cost operations nearing first production, we believe that the company is well-positioned to generate strong long-term returns and provide valuable geopolitical diversification compared to other major lithium players, justifying its continued position as one of our Top Picks for 2025," wrote Heiko Ihle, analyst at H.C. Wainwright & Co., in a July 14 research report.

Earlier this month, Atlas released a definitive feasibility study of Neves, Streetwise Reports reported. Study highlights were strong economics and a low capex. At an SC5.5 price of US$1,700 per ton (US$1,700/ton) and at a break-even SC5.5 price of US$735/ton, the project would yield a net present value of about US$540 million (US$540M) and an internal rate of return of 145%. Remaining capex to be paid is US$57.6M.

"The limited capex remaining, coupled with Neves' status as a shovel-ready project, place Atlas in pole position to become the next lithium producer in Brazil's lithium valley over the next year," wrote Jake Sekelsky, analyst with Alliance Global Partners, in an Aug. 5 research report.

Sekelsky expects Atlas to keep moving forward at Neves despite lithium market headwinds because of the project's low cost structure and limited capex needed to take it to production. That said, the analyst expects lithium prices to start moving up as 2026 approaches, coinciding with Atlas' project development ramp-up. Sekelsky also pointed out the expansion potential upside as Atlas could, down the line, increase plant capacity to 300,000 tons per year of SC5.5 from 150,000. Sekelsky has a Buy rating and a target price on Atlas, implying a potential return for investors of 235%.

H.C. Wainwright Analyst Ihle also rates Atlas Buy, and his target on the lithium developer suggests a possible 201% uplift, according to his report. In it, the analyst highlighted how close Atlas is to producing battery-grade spodumene concentrate and how it already secured agreements tied to future production, with Chengxin and Yahua, two major lithium companies, and Mitsui & Co. Ltd., a general trading company. Also, noted Ihle, subsidiary Atlas Critical Minerals, with about 54,000 hectares of property prospective for total rare earth oxides, titanium, graphite, and, potentially, uranium, strengthens Atlas Lithium's position in Brazil's critical minerals sector. 

"This project complements the firm's Neves project, as we expect the near-term cash flow to support Atlas' long-term strategy of becoming a leading player in [the] global energy transition," wrote Ihle.

Ownership and Share Structure

According to Atlas Lithium, its management and insiders own about 27% of the company's shares. Strategic partners, including Mitsui & Co., hold another roughly 11%. Institutional investors own about 10%. The rest, about 52%, is in retail.

Refinitiv reports that Atlas has 19.58M outstanding shares and 11.43M free float traded shares. Its market cap is US$117.3M. Its 52-week range is US$3.54–12.48 per share.