Shenghua, Supported by CATL, to Launch $845M High-Density LFP Plants

October 29 — A leading supplier of high-quality lithium iron phosphate (LFP) cathode materials, supported by a major battery manufacturer, is set to invest nearly 6 billion yuan (approximately $845 million) to develop two new high-tap-density LFP manufacturing plants.

The company plans to establish a factory with an annual capacity of 350,000 tons of LFP cathode materials in the Deyang-Aba Ecological Economic Industrial Park in Mianzhu, Sichuan Province, at a cost of 4 billion yuan. Additionally, it will partner with a raw material supplier to invest 2 billion yuan in a joint venture plant within the same industrial park, with a capacity of 175,000 tons per year, according to the shareholder’s announcement made yesterday.

This capacity expansion will significantly increase production, as the company’s current output of high-tap-density LFP is approximately 128,200 tons annually, based on the last fiscal year’s financial report of the auto parts and cathode materials producer.

The initial plant will be developed in two stages, each taking 12 months to construct. The joint venture will be owned 51% by the company, with the remaining 49% held by the partner. Further details about ownership specifics have not been disclosed.

Compared to standard LFP batteries, those made with high-tap-density LFP exhibit higher energy density and are better suited for fast charging applications.

Earlier this July, the company announced its initial plans for the joint venture, which initially aimed for an annual capacity of 100,000 tons. The two parties also intend to establish two additional joint ventures to produce key raw materials.

The company is a major supplier of LFP cathodes for a well-known electric vehicle manufacturer, which has supported its capacity growth and daily operations through equity investments and advance payments since March.

Last month, the battery maker committed to providing the supplier with 500 million yuan (around $70 million) this month and 1 billion yuan next month to finance new production lines dedicated to LFP cathodes and other battery materials. These materials will be exclusively supplied to the battery company. The investment is also expected to increase its ownership stake in the supplier to 51%.

Additionally, the two companies signed a supply agreement in June, prioritizing the production of lithium battery cathode materials that meet the battery maker’s specifications from this year through 2029, with support from advance payments to facilitate capacity expansion.

Shares of the auto parts and cathode materials producer dipped 2.4%, trading at 19.11 yuan (about $2.69) as of 2 p.m. in Shenzhen. The phosphate mining and fertilizer company involved in the joint venture saw its stock rise 1.3% to 10.96 yuan, while the battery producer surged 2.9%, trading at 397.54 yuan (approximately $56) per share.