We present a quantum field theoretic description on the t–J model on a square lattice with dilute holes (i.e. near half-filling), based on the compact mutual Chern–Simons gauge theory. We show that, due to the presence of non-perturbative monopole plasma configuration from the antiferromagnetic background, holons (carrying electric charge) are linearly confined and strongly localized even without extrinsic disorder taken into account. Accordingly, the translation symmetry is spontaneously broken at ground state. Such an exotic localization is distinct from Anderson localization and essentially rooted in intrinsic Mott physics of the t–J model. Finally, a finite-temperature phase diagram is proposed. The metal–insulator transition observed in in-plane resistivity measurement is identified to a confinement–deconfinement transition from the perspective of gauge theory. The transition is characterized by the order parameter “Polyakov-line”.