- China’s Sichuan province, which is a hub for the important lithium battery component, ordered industrial users in 19 of 21 cities to suspend production
- Temperatures in the province, home to nearly 84 million people, hovered above 40-42 degrees Celsius
- The local government decided to make the electricity supply of housing a priority
- Get the biggest business stories emailed to you every weekday, or go to Fin24 front page.
China’s lithium hub in Sichuan province will regulate power supplies to factories until Saturday, state media said, as a heat wave increases demand for electricity and dries up reservoirs.
Temperatures in the province, home to nearly 84 million people, have hovered above 40-42 degrees Celsius (104-108 degrees Fahrenheit) since last week, according to the China Meteorological Administration, increasing demand for air conditioning.
The region relies on dams to generate 80% of its electricity, but rivers in the area dried up this summer, Beijing’s Ministry of Water Resources said.
The southwestern Chinese province produces half of the country’s lithium, which is used in electric car batteries, and its hydropower projects power industrial centers along the country’s east coast.
But local authorities decided to prioritize power supply to residential areas, ordering industrial users in 19 of the province’s 21 cities to suspend production until Saturday, according to a statement issued on Sunday.
Several companies, including aluminum maker Henan Zhongfu Industrial and fertilizer maker Sichuan Meifeng Chemical Industry, said in stock exchange filings that they were suspending production.
A factory run by Taiwanese giant and Apple supplier Foxconn in the province has also suspended production, the Taipei Central News Agency reported.
Some companies will be allowed to operate with limited capacity depending on their production needs.
“Sources estimate that at least 1,200 tonnes of lithium production will be cut due to disruptions in these five days,” Rystad Energy analyst Susan Zu told AFP, adding that lithium carbonate prices had jumped since Monday.
Extreme weather in China has led to several major cities recording their hottest days on record.
State media reported that China’s National Observatory issued another high temperature warning on Monday as the mercury soared above 40 degrees Celsius (104 Fahrenheit) across the country.
Provinces including Zhejiang, Jiangsu and Anhui, which rely on electricity from western China, also imposed power restrictions on industrial consumers to ensure enough power for homes, local media reported.
Scientists say extreme weather events around the world have become more frequent due to climate change and are likely to increase as global temperatures rise.
