(Yicai) Feb. 23 -- The price of China’s lithium carbonate futures continued to climb today amid market rumors that the government will conduct another round of environmental inspections in the lithium hub of Yichun, eastern Jiangxi province. Last year’s probe had wide ranging effects around the world on the price of the raw material used to make electric car batteries.

The main lithium carbonate futures contract climbed 2.97 percent to CNY100,500 (USD14,000) today. Yesterday it advanced 0.77 percent and the day before that 4.42 percent.

Regulators may start another round of inspections in Yichun towards the end of next month due to renewed environmental concerns in the lithium-rich area, which is home to 28 percent of the country’s lithium mica reserves, according to a report by the Shanghai Metals Market. This would lead to the shut down of companies unable to properly handle lithium slag.

Lithium salt producers in Jiangxi province are still operating as usual and the rumors are not impacting operations for the time being, the report said. Those that had maintenance scheduled are proceeding as planned.

Jiangxi Special Electric Motor has not been notified of another environmental probe and the leading lithium carbonate producer is operating as normal, The Paper reported.

There is a routine environmental inspection of lithium producers in the area every April, The Paper added, citing local sources.

Last year, the lithium slag generated from the lithium carbonate production process became an area of environmental concern, triggering a government probe into possible illegal mining activities in Yichun, and many lithium miners and processors were ordered to halt operations.

Due to the eight-day Lunar New Year holiday earlier this month, China’s lithium carbonate production is expected to slump 17 percent this month from the month before to 32,005 tons, the Shanghai Metals Market said.

The production of lithium mica-prepared lithium carbonate could tumble 33 percent to 7,750 tons, it added. While the production of the raw material lithium iron phosphate may sink 26 percent to 73,200 tons and that of ternary lithium materials could fall 14 percent to 48,000 tons.

There is plenty of lithium carbonate on the market and prices remain quite weak, CICC WM Futures said.

Editor: Kim Taylor