The High Cost Of Lithium Mining In Yichuan

By Sophia Francise

June 16, 2023
Mining Excavator

According to Reuters, trucks laden with ore from the Baishi Huashan lithium mine in southern China are heading to smelters in the valley below to cash in on the electric vehicle battery boom.

Yichun, China’s most prospective region for lithium, is key to reducing its reliance on metal imports for its battery industry. It makes three-quarters of the world’s lithium-ion batteries.[1]

Yichun aims to quadruple its output of 350,000 metric tons of lithium carbonate equivalent (LCE) by 2025, as much as Australia produced last year.

Yichun is the most vulnerable to the recent global fall in lithium prices, raising questions about how it will meet its target. 

Additionally, concern is growing about the environmental impact of extracting lithium ore from lepidolite, leading to the closure of some plants, further challenging the country’s drive for self-reliance.

China’s move to rein in the sector and slash EV subsidies has caused a drop in monthly output in Yichun, resulting in lower lithium demand and higher prices.

“Many investments in Yichun are now at risk after prices fell this year,” said Yang Yaohua, an analyst at Guosen Futures.

China depends on imports for 55% of its lithium, and Beijing wants to boost domestic output. 

Yichun, a city of 5 million people surrounded by forest-covered mountains, is leading the push. 

202 companies, including battery giants CATL and Gotion High Tech, have invested in the city’s smelters and mines, according to Yichun’s website.


Cost Challenge

Yichun’s location is key for battery materials makers, as its mines are more accessible than brine lakes and spodumene rock.

The city has been investing in lithium carbonate production from lepidolite and other sources to attract investment. 

It has also taken stakes in mining companies to help battery materials makers that do not have mines overseas. However, development in other lithium-rich regions needs to catch up.

“There are very few battery precursor makers in Qinghai, and the brine lake production in Qinghai and Tibet plateau areas can be very limited during extremely cold winter weather,” said Arena Yang, a Shanghai-based battery metals analyst at CRU.

Yichun’s separation of lithium from lepidolite costs 100,000 yuan per metric ton, compared to 40,000-50,000 yuan for brine and 50,000-60,000 yuan for spodumene.

This was manageable until lithium prices dropped after Beijing cut EV subsidies.

“The higher costs are concerning, especially if lithium prices remain on a downtrend,” said Yang, the Guosen analyst.

He sees lithium prices falling to 100,000 yuan as soon as next year from 320,000 yuan because of a looming global surplus.

‘Natural Resources Chaos’

Environmental harm is a growing problem, which further dims the future for lepidolite.

Along the road to the Baishi mine, red banners implore: “Unite to crack down on natural resources chaos.”


According to Wu Wei, an assistant professor at Xiamen University, Lepidolite extraction and smelting produce toxic by-products, such as thallium and tantalum, which can cause severe water pollution. 

Media reports also indicate that Yichun authorities have found toxic substances in the Jin River.

According to Eric Norris, president of Energy Storage at Albemarle (NYSE:ALB) Corp., the world’s largest lithium miner, miners in the United States would never be permitted to process lepidolite the way it is done in China.

“It comes at a huge environmental cost,” Norris told Reuters in an interview.

In December, Yongxing Special Materials Technology suspended production at a subsidiary’s plant in Yichun for 10 days while authorities investigated abnormal water quality in the Jin River. 

Chinese media outlet The Paper reported that Yongxing’s plant was among four factories that suspended output after high levels of thallium were found in water samples from the river. 

Yongxing did not respond to emailed questions, the Yichun government’s news department did not answer several calls, and the Jiangxi provincial government’s news department still needs to respond to a request for comment.

By 2025, Yichun would produce 10 million tons of tailings if it reached its target of 500,000 metric tons a year of lithium carbonate output. 

This would be more than ten times the current tailings handling capacity in Yichun, according to Ma Jun, director of the Institute of Public & Environmental Affairs (IPE).

“Previously, local environmental supervision was not strict. As it gets stricter now, lithium resources in Yichun will lose their competitiveness with the higher costs for environmental protection,” Ma said.

Yichun’s ambitions of increasing China’s lithium supply from lepidolite to 13% of the global supply between 2022 and 2025 remain unclear. 

UBS analysts see China’s lithium supply from lepidolite tripling to 280,000 metric tons, well short of Yichun’s target.

“Unless lepidolite producers find a way to solve the environment and costs issues via technology innovation and industry upgrade, it will remain a second choice to spodumene,” said Li Qi, an analyst at British consultancy Benchmark Mineral Intelligence.


  1. Siyi Liu, and Dominique Patton, ‘Analysis-In China’s lithium hub, mining boom comes at a cost By Reuters’,, 15 June 2023,[]