(Yicai) Oct. 29 -- Jiangxi Shenghua New Material, a supplier of high-quality lithium iron phosphate cathode materials backed by battery giant Contemporary Amperex Technology, plans to invest almost CNY6 billion (USD844.8 million) to build two new high-tap-density LFP factories.

Shenghua plans to build a plant with an annual capacity of 350,000 tons of LFP cathode materials in Mianzhu's Deyang-Aba Ecological Economic Industrial Park in China's Sichuan province for CNY4 billion, its shareholder Fulin Precision announced late yesterday. In addition, it will invest CNY2 billion with raw material supplier SD Lomon to build a joint venture plant with an annual capacity of 175,000 tons in the same park, it added.

The capacity expansion plan will significantly boost Shenghua's capacity, with its output of high-tap-density LFP standing at only 128,200 tons as of the end of last year, according to the annual financial report of Fulin Precision, an auto parts and cathode materials producer.

The first factory will be built in two phases, each with a construction period of 12 months, Fulin Precision noted. Shenghua will hold 51 percent of the JV factory, with SD Lomon owning the rest, it said, without disclosing further details.

Compared with standard LFP power packs, batteries made with high-tap-density LFP have higher energy density and are more suitable for fast charging.

In early July, Fulin Precision announced the initial construction plan for the JV plant, which was to have an annual capacity of only 100,000 tons. The two investors also intend to build two other JV factories for two key raw materials, it added.

Shenghua is a core LFP cathode material supplier of CATL, which has helped it expand capacity and support daily operations via equity investment and advance payment since March.

Last month, CATL said it would provide Shenghua with CNY500 million (USD70.4 million) that month and CNY1 billion next month to finance new production lines for LFP cathodes and other battery materials, which will be exclusively supplied to the battery giant. The investment is expected to increase CATL's stake in the supplier to 51 percent.

In addition, CATL and Shenghua signed a supply deal in June, under which Shenghua will give priority to producing lithium battery cathode materials that meet CATL's requirements from this year through 2029, while CATL will support Shenghua in continuing to expand production capacity via advance payments.

Shares of Fulin Precision [SHE: 300432] fell 2.4 percent to CNY19.11 (USD2.69) each as of 2 p.m. in Shenzhen today. SD Lomon's stock [SHE: 002312], a leading phosphate miner and fertilizer producer, rose 1.3 percent to CNY10.96. CATL [SHE: 300750] jumped 2.9 to CNY397.54 (USD55.97) a share.

Editor: Martin Kadiev