Proactive Investors - The global lithium market is bracing for a wave of disruption as its top production hub, responsible for around a tenth of the world’s supply, faces sweeping closures amid a Chinese government probe of environmental infringements.
Some ore-processing operations in mountainous Yichun city, in Jiangxi province, have been halted after environment officials arrived from Beijing over the past week to investigate alleged violations at lithium mines, the Yicai newspaper reported.
That threatens between 8% and 13% of global supply, according to various analyst estimates, although it’s unclear for how long the immediate shutdowns will last, said BNN Bloomberg.
Some Chinese lithium companies had already been targeted for infringements, including incidents of pollution, over the past year. However, this is a wider crackdown and involves officials from central government departments including the Ministry of Natural Resources in China.
The crackdown follows a local lithium frenzy at Yichun as miners raced to feed soaring demand for the key battery element.
Undoubtedly, this is lithium’s moment. Car makers are hitting a bottleneck as they race to manufacture more electric vehicles (EVs) and the lithium-ion batteries that power them.
Demand for lithium has outpaced supply, leading to a massive run-up in prices.
Lithium’s importance to low-carbon technologies should insulate its demand curve from wider pressures, and the supply response will take years, according to industry experts.