Beijing is investigating illegal mining activities in China’s lithium hub

The Chinese central government has sent a task force to investigate illegal mining in the country’s lithium hub, Yichun, the financial newspaper  Yicai reported.

Yicai  , citing sources, said the investigation comes amid a “stop and rectify” of lithium producers in Yichun, a small town in southern Jiangxi province known by some as the Asian lithium capital.

News of the investigation follows Thursday’s announcement by the Yichun local government that it was cracking down on criminal activities in the lithium battery industry, such as unlicensed and environmentally damaging mining.

Yichun has 1.1 million tons of lithium oxide reserves and accounts for 12% of world production, according to the  South China Morning Post  .

A lithium analyst, who declined to be named, told  Yicai  that the industry optimistically estimates the shutdown will last about a month.

Yichun currently produces between 10,000 and 12,000 tons of lithium carbonate per month, he reported.  “If production is suspended for a month, the scale affected could represent about 10% of the global market,” the analyst said.

Lithium batteries are a key component of electric vehicles, demand for which has increased rapidly in recent years as climate-conscious consumers buy cars equipped with electric powertrains amid soaring fuel prices.

Yichun’s rich lithium reserves have led to a rapid expansion of the city’s mining industry, which has brought significant tax revenue to the local government.

But the industry has also been plagued by over-mining and under-regulation, leading to environmental problems such as the pollution of local water sources by thallium, a toxic metal.

CATL, the world’s largest battery manufacturer, is one of several Chinese conglomerates that own assets in Yichun.

Last December, several companies in the city’s lithium industry halted production while the local government investigated the water quality of a river that supplies residents.

(By MNM with Reuters and Eduardo Baptista)