(Yicai Global) July 4 -- GEM, one of China’s biggest suppliers of battery raw materials, has won a deal to provide Chinese sodium battery startup Shenzhen Paragonage with sodium-ion cathode materials in its first foray into this emerging market.

Shenzhen Paragonage is expected to buy between 10,000 metric tons and 15,000 metric tons of sodium-ion battery cathode materials a year from now until the end of 2025, GEM said yesterday, citing the deal signed by the two parties. Shenzhen Paragonage will be given priority for these materials among its customers.

GEM, though, did not state how much sodium battery materials it currently produces and, according to its 2022 annual report, the Shenzhen-based firm has only recently completed pilot experiments and has not yet started mass production.

GEM, though, is an investor in Shenzhen Paragonage, which secured an angel round of financing amounting to tens of millions of Chinese yuan, equivalent to millions of US dollars, last month, 36Kr reported at the time.

Sodium batteries, which replace lithium with cheaper sodium, are not ready to take over the world of electric vehicles until the value chain improves, according to a report released by the China Passenger Car Association and Kerui Consulting in May. As the price of lithium falls this year, sodium's price advantage is waning. Sodium, though, performs better in low temperatures and is safer so it could replace lithium under certain scenarios, it added.

The two firms will sign a purchase and sale agreement and a raw material processing contract later to specify the actual purchase quantity, GEM said.

GEM will also develop new sodium battery cathode materials based on Shenzhen Paragonage’s needs, and they will work together to advance technological innovation in and the industrialization of the sodium power industry, it said.

The two parties intend to explore technological development and strategic cooperation in sodium battery recycling, so as to bridge the gap in the reuse of sodium batteries, it added.

Unaffected by the news, GEM’s share price [SHE:002340] closed up 1 percent at CNY7.02 (USD0.97) today.

Editor: Kim Taylor