‘Asia’s lithium capital’ grinds to a halt as output of battery material stops in Yichun amid pollution investigation in Jiangxi province’s Jin River
- Shenzhen-listed Yongxing Special Materials Tech says it has halted production in Yichun to facilitate the investigation
- Environmental protection in the new energy production process has been ‘neglected’, analyst says
Some leading producers in China’s Yichun city, “Asia’s lithium capital”, have halted production amid an investigation by the local government into the abnormal water quality of Jin River, the main source of the city’s residential water supply, prompting concerns about the underbelly of lithium production.
Last week, Shenzhen-listed lithium salt producer Yongxing Special Materials Tech said in a statement that it had halted its lithium carbonate production line in Yichun, in the southeastern Jiangxi province, to facilitate the investigation.
Shenzhen-listed Anshan Heavy Duty Mining Machinery and Shanghai-listed KangLongDa Special Protection Technology, two other major lithium producers, also announced a temporary halt at their lithium carbonate plants in the city, but did not specify why. All three firms did not respond to requests for comment.
The companies did not disclose when they would resume production, and an estimate by market intelligence provider Shanghai Metals Market suggests the production halt is likely to affect 3,000 to 4,000 tonnes of lithium carbonate equivalent.
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“The new energy industry has seen vigorous development in recent years, and the energy metal smelting capacity has rapidly expanded, but environmental protection in the production process has been neglected,” Zhou Zhe, analyst at Shenzhen-based Essence Securities, said in a report published on Sunday.
“After this incident, we don’t rule out the possibility that heavy-metal pollution may become a restricting factor for the development of non-ferrous metals and the new energy industry. The prevention and control of heavy-metal pollution are extremely urgent.”
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Yichun, which is home to the world’s largest mine for lithium-bearing mineral lepidolite and has a reserve of 1.1 million tonnes of lithium oxide, represents 31 per cent of China’s recoverable lithium oxide output and 12 per cent of the world’s output, according to official data. The local government, which touts the city as “Asia’s lithium capital”, has also attracted leading companies in the lithium supply chain, including Contemporary Amperex Technology Limited (CATL), the world’s largest EV battery maker, and BYD, the world’s largest EV maker.
Lithium batteries are viewed as a low-carbon emitting alternative to fossil fuels, but the lithium supply chain – from upstream mining and extraction to midstream smelting and manufacturing to downstream application and recycling – has several downsides for the environment, as it requires large quantities of water and energy, and discharges heavy-metal pollutants.
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It can take about 70,000 litres of water to produce one tonne of lithium, according to BloombergNEF. According to Wood Mackenzie, lithium extracted from brine can generate 3.5 times more carbon dioxide, as mining of the lithium-containing mineral spodumene is energy intensive, and also involves transporting the concentrate to China for refining.
The Chinese government has been taking action to reduce the battery industry’s adverse effects. In 2013, the ministry of ecology and environment released an emissions standard for pollutants for the battery industry, which set discharge limits for water and air pollutants in the battery supply chain and stipulated requirements for monitoring of battery manufacturing enterprises.
China should boost initiatives to study and monitor carbon footprints across the EV battery supply chain, because the country has “apparently fallen behind”, Zeng Yuqun, CATL’s chairman, said at an industry forum in Beijing in August.
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According to consultancy Cairn Energy Research Advisors, the global lithium-ion industry is expected to grow from 100 gigawatt hours (GWh) of annual production in 2017, to almost 800 GWh in 2027.
