(Yicai Global) March 14 -- Compliant lithium miners and processors in Yichun have been permitted to resume work amid an ongoing investigation into illegal mining activities in the Chinese city, which is known as the lithium capital of Asia. 

Jiangxi Tungsten Holding Group resumed operation at a beneficiation plant four days ago, Yicai Global learned, and the main part of battery giant CATL's local beneficiation plant will start operation in May.

“Once a company meets all the requirements, its operation can be resumed,” the head of a local lithium company told Yicai Global. “Only those lithium plants without complete licenses are still suspended.”

A team including officials from the Ministry of Natural Resources and the Ministry of Ecology and Environment was sent to the city last month to investigate whether companies were mining lithium without permits or with expired licenses. 

Lithium slag generated when producing lithium carbonate has become an area of environmental concern. To prevent secondary pollution from lithium slag, the local government of Yichun has launched a new environmental policy, banning lithium slag landfill and piling in the open air, officials told Yicai Global.

The move slashed lithium slag prices to zero from CNY100 (USD14.50) per ton.

Yichun is expected to produce 400,000 tons of lithium salt this year, according to data released during the recent Two Sessions by Lin Kai, a member of the National Committee of the Chinese People’s Political Consultative Conference from Jiangxi province. 

The city is also expected to produce more than 15 million tons of lithium slag this year, but it can only dispose of 900,000 tons at the moment, Yicai Global learned. 

There have been lithium slag disposal violations in Jiangxi, according to the 2022 inspection report on ecological and environmental protection from the provincial ecology and environment department. For example, Jiangxi Yongxing Special Steel New Energy Technology illegally sent 80,000 tons of lithium slag to other provinces in 2021.

Slag recycling and processing capacity cannot meet the growing demand in the lithium industry, and better disposal methods should be found as soon as possible, the report said.

The Yichun probe may lead to more investment in environmental protection and higher lithium carbonate production cost, an industry insider said.

The prices of some battery materials fell yesterday, with battery-grade lithium carbonate down by CNY7,000 (USD1,017) to CNY355,000 (USD51,581) a ton on average, a 40 percent retreat from a peak of CNY600,000 (USD87,180), according to data from Shanghai Ganglian E-commerce Holdings.

Editor: Tom Litting