Tomorrow Investor

China’s Biggest Lithium Zone Pays the Price of Progress

The Chinese city of Yichun may well be the epicenter of China’s aggressive push to both reduce its reliance on lithium imports as well as assert its dominance in the lithium mining industry, but its people and the surrounding environment are all paying a steep price – something which could potentially derail China’s plans to be self-reliant when it comes to lithium.

Miners in Yichun and its immediate vicinity extract the increasingly precious metal from lepidolite ore. Indeed, officials boast that they hope to hit an output target of around 350,000 metric tons of processed lithium carbonate – the equivalent of Australia’s total output for 2022 – by 2025.

What they did not count on was that production costs in the area are much higher than those in other lithium mining zones in China. In which case, experts are wondering how Yichun will be able to meet its target and how it could be shielded from the recent drop in the price of lithium across the globe.

The Problem with Yichun

Unlike other lithium-rich areas in the country, cost is the biggest issue that Yichun deals with. Extracting lithium from raw lepidolite costs around $13,910.00 per metric ton – roughly twice as much as extracting the mineral from either lithium-rich brine or spodumene ore. 

Miners operating in Yichun found the cost difference almost negligible until the Chinese government removed subsidies for electric vehicle companies.

According to Yaohua Yang, an analyst for Guosen Futures, higher production costs may prove to be the city’s downfall should the global price of lithium continue to drop. 

On top of these, the environmental toll of mining facilities in Yichun has also led to the closure of a number of operations, mostly due to the way waste materials were being disposed of, much to the detriment of the the community’s health.

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