In Depth: Lithium Boom’s Fallout in Chinese City Hinders Local Industry’s Recovery

The article discusses the significant impact of the rapid rise of the lithium industry in Yichun, Jiangxi province, China. Wu Xiuli, a local resident, recalls when the streams near her village were clean, but the current lithium boom has led to environmental degradation, particularly pollution of the water sources.[para. 1][para. 2] Yichun is called the "lithium capital of Asia," containing 28% of China's total lithium reserves as of the end of 2022, which has attracted major battery manufacturers like CATL and BYD.[para. 3][para. 4]

The increasing global demand for electric vehicles significantly pushed lithium carbonate prices, a key component of EV batteries, from around 40,000 yuan per ton in September 2020 to a peak of 590,000 yuan per ton in November 2022. This price hike led to an influx of large battery and EV manufacturers into Yichun, further accelerating industrial development.[para. 5][para. 6]

However, the lithium industry's expansion has brought persistent environmental issues to Yichun, with significant pollution problems. Local government crackdowns have attempted to address these issues, including pollution and illegal mining, but significant environmental concerns, like the buildup of toxic lithium slag, remain.[para. 7][para. 8] This slag presents a challenge for producers due to the rapid price crash of lithium carbonate starting in late 2022. Some producers are struggling to manage these materials amidst financial constraints.[para. 9][para. 10]

Specifically, high levels of thallium, a toxic element, have been detected in the local water source, exceeding safe levels and posing serious health risks. In April 2022, it was found that thallium levels at five out of seven lithium producers in Yichun exceeded safety levels by up to 15.8 times. These pollutants are linked to health risks, including nervous system damage.[para. 11][para. 12] Additionally, lithium concentrations in the Jin River have surpassed safe drinking water levels, worsening after 2020 due to increased local lithium mining and processing activities.[para. 13][para. 14]

The thallium pollution incident spurred a public backlash and prompted a major government crackdown, targeting illegal mining and environmental violations. Unregulated lithium mica mining became widespread due to surging lithium prices, further exacerbating the issue.[para. 15][para. 16] The city's initiative in 2022 led to significant industry adjustments, with many local processors and operators being targeted to curb illicit activities and protect the environment.[para. 17][para. 18]

The price drop has left many lithium companies financially constrained, forcing some to cut down on production or shut down entirely.[para. 19][para. 20] Concurrently, Yichun's lithium operations generated about 4.4 million tons of lithium slag in 2022, with expected future outputs reaching up to 31.5 million tons by 2025.[para. 21] Although reusable, the local demand for this slag is insufficient, leading to high storage costs which increase the pressure on companies and hinder recycling processes due to outdated industry standards.[para. 22][para. 23]

Efforts to introduce new standards for reusing lithium slag in construction materials have faced opposition, and without updated regulations, this waste remains a pressing issue for the city.[para. 24][para. 25] Steps have been taken to address these problems, but challenges in efficiently managing the environmental impact of the industry persist.[para. 26][para. 27]