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Ronbay New Energy Technology’s shares experienced an uptick following the company’s announcement of a CNY4.3 billion (roughly USD590 million) plan to expand production capacity. The goal is to meet the increasing demand for lithium iron phosphate (LFP) cathodes, crucial components in electric vehicle batteries and energy storage solutions.
In early trading on the Shanghai stock exchange, the company’s stock climbed as much as 3.6%, before closing 1.1% higher at CNY31.14 (USD4.56). Despite this gain, the shares are down about 12% since the end of last year.
The company plans to invest CNY2 billion in constructing a new facility with an annual output of 520,000 tons of lithium iron phosphate precursors. This facility will be part of an existing LFP cathode plant located in Liupanshui, Guizhou province. Additionally, there is a proposed CNY2.3 billion investment for a new LFP cathode manufacturing plant in Bijie, nearby. Building work for both projects is scheduled to commence this month.
LFP precursors serve as the raw material for manufacturing LFP cathodes, which are essential for high-performance batteries, especially in electric vehicles. Demand for high-density, high-quality LFP—characterized by a tap density above 2.6 grams per cubic centimeter—is rising rapidly, placing increased pressure on current supply chains. As a result, the capacity for producing advanced LFP materials remains insufficient, with supply and demand likely to become even more unbalanced.
The expansion aims to address this gap, enabling the company to capitalize on the growth driven by shortages of top-tier LFP capacity and to increase production swiftly.
This latest expansion effort comes in the wake of regulatory issues; the company and its senior executives faced penalties for misleading disclosures related to a supply agreement with the battery manufacturer CATL. Back in January, Ronbay announced securing an order to supply 3.05 million tons of LFP cathodes valued at CNY120 billion (USD17.6 billion), with deliveries set to begin within the quarter and continue through 2030.
Regulators questioned the legitimacy of this announcement, citing concerns over the company’s focus—primarily on ternary cathodes rather than LFP—and doubts about fulfilling such a large contract given current capacity limitations. An investigation by the China Securities Regulatory Commission revealed that the company had misled investors regarding the contract’s value. It was later admitted that the disclosed supply volume and contract worth were only internal estimates, not official terms outlined in any agreement with CATL.
Consequently, Ronbay and its executives faced fines totaling CNY9 million (around USD1.3 million) in February. The penalties were finalized after the regulator dismissed appeals from the company and its management last week.
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