China’s ‘lithium capital’ flags permit issues at eight mines

[Ben Graham]

Authorities in China’s Jiangxi province have identified permitting issues at eight lithium mines in Yichun, one of the country’s key production hubs, as Beijing tightens oversight of its critical mineral sector.

The Yichun Natural Resources Bureau recently issued notices to the mine operators requiring them to provide resource reserve verification reports after finding discrepancies between their licensed mining rights and the actual minerals being extracted, according a report by Benchmark Mineral Intelligence.

It follows similar measures taken last week in the western province of Qinghai, where local authorities in Haixi Prefecture ordered the shutdown of a mine run by Zangge Mining until proper lithium extraction permits are obtained. According to ministry findings, many of the resource extraction activities across the province’s salt lakes are not licensed for lithium, only minerals like potash.

Lithium prices and stocks jump after Zangge Mining halt

The moves come amid a broader regulatory push to curb illegal mining practices and bring greater discipline to the lithium supply chain, which has been expanding so rapidly in recent years that it even outpaced demand from the electric vehicle (EV) industry.

Yichun, dubbed the “lithium capital” of China, holds a significant share of the country’s lithium output, primarily sourced from a rock known as lepidolite.

Compared to the brine lakes on China’s western plateaus and the spodumene rock in southwestern Sichuan province, Yichun’s lepidolite-rich mountains are more accessible to battery makers. To date, the city has attracted investments from hundreds of key players in the EV sector, such as CATL and Gotion High Tech.

Analysts say that while enforcement actions in Yichun could temporarily disrupt production, it may also help remove irregular players and stabilize the sector over the long term. According to Founder Securities, a China-based financial services company, these measures will “help the industry clean up excess supply.”

Lithium prices in China have been soaring since some of the production in its key areas was halted last week. On Thursday, the main contract of lithium carbonate futures hit the daily upper limit, closing with a gain of over 7%, marking the highest level since March 2025. Shares of lithium miners also jumped.