Chinese authorities have announced an investigation into suspected illegal mining practices in Yichun, the “lithium capital of Asia,” which supplies about a tenth of the world’s lithium supply.
The price of lithium, an essential ingredient in batteries used in electric vehicles, hit record levels last year as demand for clean energy sources surged.
China is one of the world’s most important producers of the mineral, and the launch of the investigation, which the government announced Friday on its WeChat account, could lead to large-scale mine closures with international consequences.
Local officials note that Yichun in Jiangxi province contributes up to 40 percent of China’s domestic reserves of lithium-rich lepidolite.
According to Bloomberg, it accounts for about 10 percent of global lithium supply, giving the region the title of “Lithium Capital.”
According to local news site Kaijing, the alleged violations include “messy” extraction of lepidolite by residents of mining areas and surrounding natural areas.
Officials say unlicensed operations in the area cause serious problems such as environmental damage and traffic accidents involving mining trucks, so they will be closed.
Within the framework of the investigation, the duration of which is not yet clear, Geijing said authorities will consider acceptable violations and actions in hopes of supporting the “healthy growth” of the sector.
Beijing has stepped up monitoring of domestic mining operations in recent years, after decades of lax rules allowed small private companies to extract vast sums under limited oversight.
Recent efforts by regulators have aimed to add “traceability” and “order” to the sector, with production increasingly concentrated in the hands of several large state-owned enterprises.
Yichun city officials said they aim to boost the domestic lithium battery industry to 150 billion yuan ($21.5 billion) by 2025.