Lithium stocks soared early Monday after the world’s largest EV battery maker closed its lithium mine in China, sending lithium prices soaring.

The spike in lithium companies’ stocks comes after Contemporary Amperex Technology (C7A0.F) announced early Monday morning that it was halting operations at one of its most important mines in China — also one of the world’s largest — after its permit for the mine expired.

The company said the Jianxiawo mine, the largest in China’s Yichun lithium hub, will be shuttered for three months while it seeks to renew its license, according to Bloomberg.

CATL is the largest EV battery manufacturer in the world, holding more than a third of the market.

Shares of Albemarle (ALB) and Sociedad Química y Minera (SQM), the two largest lithium producers in the world, were up more than 11% and 9%, respectively, in early trading. Fellow major lithium miners and processors Lithium Americas (LAC) and Sigma Lithium (SGML) were up over 8% and 16%, respectively.

The price of spot lithium was up nearly 4% on Monday; lithium prices have risen over 15% in the past month.

Elon Musk’s Tesla (TSLA) is one of CATL’s biggest customers, according to a report from the Shanghai Metals Market. Tesla stock was up 2% early Monday morning.

In January, the US Department of Defense added CATL to a list of companies it says are affiliated with the Chinese military. This would ban the Defense Department from signing procurement contracts with the company beginning in June 2026

CATL’s move to shutter its mine will likely be seen as reflective of Beijing’s increasing crackdown on “involution,” which it sees as a phenomenon where increasing competitive prices for resources like lithium are self-defeating and end up slowing development instead of spurring it, according to the Financial Times.

Lithium’s centrality to the global market has exploded over the past few years due to the metal’s key role in electric vehicles, storage capacity on power grids, and a variety of electronics, including phones and laptops. Demand for the metal could grow by as much as 40% by 2040, according to a forecast from the International Energy Agency.

Lithium prices had fallen sharply over the past couple of years, hitting their lowest level since 2021 in June after dropping 20% from the start of the year, as mines around the world have continued to produce the rare-earth metal even as output has outpaced demand. Production in China alone has risen by 55% since 2023, according to data from commodities pricing agency Fastmarkets.