Some mines in one of China’s major lithium-production hubs have been allowed to restart amid a government investigation that halted activity last week, according to a report in local media outlet Cailian.
(Bloomberg) — Some mines in one of China’s major lithium-production hubs have been allowed to restart amid a government investigation that halted activity last week, according to a report in local media outlet Cailian.
A probe into the mining industry in Yichun in the southeastern Jiangxi province forced sweeping closures last week, affecting around a 10th of the battery material’s global output. All mines with valid government permits have already resumed production, Cailian reported Tuesday, citing unnamed sources at mining companies.
Yichun has been at the center of a lithium boom in the past two years, as soaring prices turned its low-grade ore — known as lepidolite — into a key source of additional supply. Major companies in China’s battery supply-chain have invested in the area, while growth in the country’s lithium output from lepidolite has been central to some bearish forecasts for the metal.
“The impact of the latest shutdowns in Jiangxi is overblown,” said Cameron Perks, an analyst at Benchmark Mineral Intelligence. The crackdown is targeting small-scale, illegal mining, and the bigger operations with licenses stopped work for just a few days, he said.
Contemporary Amperex Technology Co. didn’t immediately respond to a call seeking comment, while Gotion High-Tech Co. didn’t reply to an email. Both firms are battery-makers with investments in Yichun. Several other mining companies in the area declined to comment when reached by phone.
Mining in Yichun was largely brought to a halt last week as officials from several ministries arrived from Beijing to investigate the sector following reports of unlicensed mining and environmental infringements, Yicai newspaper reported on Sunday.
About a fifth of China’s lithium output was derived from lepidolite in 2021, according to an academic study published by the journal China Geology. Yichun’s lepidolite rocks contain less than 1% lithium, according to the study. That’s a low level that typically makes extraction more energy-intensive and expensive.
“I believe the Chinese government certainly has an interest in keeping things running smoothly, and I’m not sure that artisanal operators help there,” Perks said. “Large companies will continue to develop their projects in the region.”
The Week’s Diary
Tuesday, Feb. 28
- Nothing major scheduled
Wednesday, March 1
- China official PMIs for February, 09:00
- Caixin’s China manufacturing PMI for February, 09:45
- CCTD’s weekly online briefing on China’s coal market, 15:00
Thursday, March 2
- China Carbon Neutral Summit in Shanghai, day 1
- EARNINGS: Yunnan Energy New Material
Friday, March 3
- Caixin’s China services & composite PMIs for February, 09:45
- China weekly iron ore port stockpiles
- Shanghai exchange weekly commodities inventory, ~15:30
- China Carbon Neutral Summit in Shanghai, day 2
Saturday, March 4
- Nothing major scheduled
Sunday, March 5
- National People’s Congress begins in Beijing
On The Wire
For a sign of how much global trade has slowed, look no further than idled container ships — unused vessel capacity is near the highest level since a spike after the start of the pandemic. But where those idled ships are clustered gives insight into the industry’s bets for a rebound: a large number are positioned near China.
When China’s leaders gather in Beijing for the annual parliament next week, one of the biggest economic risks they’ll need to tackle is the mounting debt of provinces. A majority of regional governments — at least 17 out 31 — are facing a serious funding squeeze.
China Evergrande Group, the developer at the epicenter of the country’s real estate crisis, has yet to reach an agreement with major creditors on a debt restructuring framework crucial to avoiding potential court-ordered asset liquidation, people familiar with the matter said.
–With assistance from Winnie Zhu.
(Updates with analyst comment in fourth paragraph)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.