(Yicai Global) Dec. 9 -- Anshan Heavy Duty Mining Machinery will invest CNY26 billion (USD3.7 billion) to construct a production base that will cover the whole lithium battery industrial chain from the extraction of raw materials and battery production to energy storage battery plants, as the Chinese mining gear supplier expands its footprint in the battery sector.

Anshan Heavy Duty will form a consortium with local companies to invest in lithium mines in the area to extract lithium carbonate, a key raw material used to make electric car batteries, the firm said yesterday, citing the agreement penned with the government of Linwu county, central Hunan province on Dec. 8. No information about the partner firms, nor the shareholding ratio in the consortium were given.

The deal will give Anshan Heavy Duty access to the lithium reserves it needs to ensure sufficient raw material supply for the lithium carbonate facility, which will have an annual capacity of 80,000 tons, and will help cut raw material costs, the Anshan, northeastern Liaoning province-based firm said.

CNY10 billion (USD1.4 billion) will be used for ore mining, tailings treatment and the lithium carbonate plant, while the remaining CNY16 billion will go towards constructing a battery factory, it said. No construction timetable was given.

The lithium carbonate plant will be built in three phases. The first two phases will each have an annual production capacity of 20,000 tons and the third phase will have 40,000 tons.

The consortium will also construct a 40-gigawatt-hour energy storage battery project in the county. Built in three phases, the first two phases will have a capacity of 10 GWh each and the third phase 20 GWh.

Anshan Heavy Duty has been actively hiking its battery raw materials capacity recently to meet surging demand from battery manufacturers. New lithium carbonate and lithium iron phosphate plants in Yichun, the lithium capital of Asia, came online in September. And last month it said it will build a lithium carbonate plant with an annual capacity of 50,000 tons in Guixi, a city near Yichun, together with a local state-owned firm.

Unimpressed by the news, Anshan Heavy Duty’s share price [SHE:002667] plunged 10 percent today to CNY30.54 (USD4.39) as of 2 p.m. China time. However, the stock has soared 22.3 percent in the past three trading days and yesterday reached a new high since September last year.

Editor: Kim Taylor