Select Language:
Shares of the world’s leading electric vehicle battery manufacturer and a precision materials company rose following the announcement that their joint venture plans to invest 1.5 billion CNY (approximately 216 million USD) in a new factory dedicated to producing high-quality lithium-iron phosphate cathodes.
The battery producer ended the day up by 4.9%, closing at 365.03 CNY (about 52.61 USD) per share in Shenzhen. Meanwhile, the precision materials company surged 8.5%, finishing at 18.49 CNY (around 2.66 USD).
The new facility, located in Tongren within China’s southwestern Guizhou province, will be developed through a partnership with local firms. The factory is expected to produce 500,000 tons of ferrous oxalate annually and is scheduled to be completed and operational by the end of September, with all output either sold to the joint venture or its affiliates.
A Jiangxi-based company will create a joint venture with a local lithium battery materials supplier to oversee the project, holding a 90% stake in the new entity. The plant will utilize waste slag from copper smelting to produce ferrous oxalate, capitalizing on the technical expertise and resource advantages of both partners. The product will supply Shenghua’s high-density LFP precursor facilities, helping ensure upstream raw material supply and optimizing manufacturing costs.
In a separate update, the precision materials firm announced that it and the battery manufacturer will invest capital into Shenghua to fund the Tongren project, expand capacity, and develop new products. The precision company will inject 500 million CNY (around 72.1 million USD) by converting debt into equity, while the battery manufacturer will contribute 747 million CNY in cash.
Following this capital infusion, the precision company’s ownership will decrease from 79.6% to 64.4%, while the battery producer’s stake will rise from 18.7% to 33%. Previously, in late September, the companies planned a joint investment of 3.1 billion CNY to increase Shenghua’s capital, aiming for the battery giant to hold a controlling 51%. That plan was withdrawn in January, with the current arrangement instead providing the battery company with approximately 3.18 billion CNY in strategic investment.
As a result, the battery company becomes the second-largest shareholder in Shenghua with a 12% stake.
This Tongren project marks the second major investment in lithium battery raw materials by the precision company within a month. Earlier in January, Shenghua announced plans to invest 8.7 billion CNY in Inner Mongolia to build a high-end energy storage LFP plant capable of producing 500,000 tons annually, along with a ferrous oxalate factory with a capacity of 600,000 tons per year. The plan also includes collaborating with a local partner to establish a joint venture producing 400,000 tons of oxalic acid annually, a critical raw material for ferrous oxalate.
Rising demand for energy storage solutions based on LFP batteries is encouraging Chinese suppliers to expand their cathode material manufacturing capabilities. Additionally, Ningde-based companies are deepening partnerships with upstream suppliers like Shenghua to secure essential raw materials amid soaring market needs.
ChatGPT
Perplexity
Gemini AI
Grok AI
