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Albemarle, Livent rise as China clamps down on illegal lithium mining

By Geoffrey Smith -- Shares in listed lithium miners advanced in early trading in New York on Monday, after China moved to crack down on illegal production of the battery metal in a key producing province.

Albemarle (NYSE:ALB) stock rose 3.5% and Livent (NYSE:LTHM) stock rose 2.2% after Chinese media said the central government in Beijing had sent a law enforcement team to investigate alleged unlicensed mining in the province of Jiangxi.

The Chinese financial news site Yicai said the investigation would be carried out during a "shutdown and rectification" of activities in the sector.

Yicai estimated that Jiangxi produces around 10,000 to 12,000 tons of lithium carbonate, a key intermediate product in the refining process, every month.

It wasn't immediately clear how much of this output would be affected but, according to the South China Morning Post, Jiangxi is home to over 12% of the world's output of primary lithium. As such, any disruption is likely to be felt keenly in the global market for a metal that is central to the supply chain for electric vehicle batteries.

The boom in demand for electric cars over the last few years has created a powerful incentive to develop lithium deposits at a breakneck pace. According to various reports, this has led to serious environmental damage in Jiangxi, a region around the same size as Wisconsin that is home to 45 million people.

The news was a sharp reminder of the crucial place that China occupies in the global lithium market, and bolstered the premium attached even to more speculative mining companies in the West. FREYR Battery (NYSE:FREY), a miner with no revenue as yet, rose 10% on the news, while Toronto-listed Lithium Americas (TSX:LAC), another junior miner rose 2.1%.

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