[Weekly Early Read] Yichun, the “Lithium Capital,” as a Case Study: The Aftermath of Rapid Lithium Industry Chain Expansion (AI Translation)

【周刊提前读】锂都宜春样本：锂产业链快速扩张后遗症

1. The article examines the rapid development and ensuing challenges of the lithium industry in Yichun, Jiangxi Province, China, reputed as the “Lithium Capital of Asia”. Mining in Yichun began in the 1970s for rare metals like tantalum and niobium, but the area is now globally known for the largest proven lepidolite lithium deposit. Lithium is prized for its role in high-density, lightweight batteries, especially for electric vehicles (EVs), and demand surged alongside China’s “dual carbon” strategy (carbon peaking and neutrality). China’s new energy vehicle sales now account for nearly 60% of the global market. The lithium price peaked in 2022 at over 450,000 RMB/ton, at one point exceeding 600,000 RMB/ton [para. 1].

2. The boom attracted major battery manufacturers like CATL and Gotion to Yichun, rapidly advancing local resource extraction, sector planning, and enterprise influx. By 2022, Yichun’s industry chain division was established. However, as lithium prices tumbled—dropping to below 90,000 RMB/ton in July 2024, an 80% decline—the industry entered intense competition, squeezing profits. Nearly half of Yichun’s ore-processing plants suspended production, and smelting businesses were tested on cost control, mainly influenced by mine rights and ore grade, as Yichun’s lithium ore has low lithium content [para. 1][para. 2].

3. Processing 1 ton of lithium carbonate in Yichun produces 30-50 tons of lithium slag (over 96% waste byproduct). In 2022, the city generated 146,500 tons of lithium carbonate and 4.4 million tons of lithium slag. The complex and environmentally hazardous slag is mostly stored in warehouses and not classified as hazardous waste. In the profitable period, environmental concerns were less prominent, but with falling margins, firms cannot afford to extract valuable byproducts like rubidium and cesium—amplifying environmental risks. A 2022 environmental inspection revealed significant ecological hazards from improper waste management [para. 2][para. 3].

4. Acknowledging ecological risks, the Yichun government took measures by planning disposal sites and seeking resourceful applications for lithium slag in cement, road, and building materials. However, utilization has been hampered by lack of standards, with cement and some construction uses rejected by industry associations. As of July 2024, only three of six planned lithium slag disposal sites are operational [para. 3][para. 4].

5. The article provides detailed coverage of specific environmental and community impacts. Local villagers reported loss of arable land and water pollution. Research has shown that lithium levels in local waterways often exceeded safety thresholds. There is currently no national standard in China for lithium exposure, with the US EPA’s reference being 2μg/kg body weight per day [para. 5][para. 6].

6. Yichun’s lithium mining has heightened risks from toxic byproducts, especially thallium—a highly toxic element. A major thallium contamination event in 2022 linked to local enterprises prompted government and regulatory action, with upgrades in waste treatment and stricter standards. Nevertheless, Yichun’s rapid industrial expansion led to regulatory and environmental lapses, including illegal mining and unregulated waste storage [para. 7][para. 8].

7. In response, 2023 saw unprecedented regulatory crackdowns. Over 30 key issues were addressed, with environmental and mining authorities controlling extraction quantities and enforcing environmental standards. The result was the closure of many ore-processing and lithium-salt production enterprises and a substantial reduction in overall mining and processing capacity, partially to reserve capacity for leading companies such as BYD and Ganfeng Lithium [para. 9][para. 10].

8. The sector’s rapid rise was underpinned by lowered technical barriers and improved lithium extraction processes. From 2018 to 2023, Yichun’s lithium carbonate output soared from 12,000 to nearly 160,000 tons. However, overexpansion and the subsequent market downturn led to widespread idle capacity, especially for businesses without mining rights who could not weather low prices [para. 11][para. 12][para. 13].

9. The collapse in lithium prices post-2022, due to oversupply and slowing EV sales, caused severe operating losses in Yichun. Most processing enterprises without owned mines shut down, and overall sector output decreased—with operating rates at 60-70% for lithium processing and higher for downstream materials [para. 13][para. 14].

10. An unresolved issue is the disposal and resource utilization of millions of tons of lithium slag. While some efforts target use in ceramics, glass, and road base materials, absorption capacity is insufficient. Existing standards often do not support large-scale use; for instance, standards for cement and building materials restrict the use of lithium slag. The city is now prioritizing road use and pushing for the development of more comprehensive national and local standards [para. 15][para. 16].

11. Experts note that a sustained low-price environment reduces firms’ willingness and ability to invest in circular use of waste, threatening both environmental goals and industry sustainability. Yet, Yichun’s government maintains its commitment to promoting waste utilization alongside the industry’s continued development [para. 16].

12. In summary, Yichun’s lithium boom has brought both dramatic economic growth and complex environmental and regulatory challenges. Efficient and sustainable resource use and waste management remain key hurdles as the global and national lithium market faces cyclical downturns [para. 16].