(Yicai Global) Sept. 16 -- Chanhen Chemical’s shares jumped after the phosphate resources-rich Chinese firm said it will spend CNY10 billion (USD1.6 billion) on a base to produce raw materials for electric vehicle batteries amid surging demand for EVs.

Chanhen [SHE:002895] closed 3.5 percent up at CNY48.50 (USD7.53), after earlier jumping as much as 8.7 percent. Its stock price has soared over 350 percent since early June, when it announced the construction of a new iron phosphate’s production line.

The plan disclosed late yesterday by the Fuquan, Guizhou province-based firm combines two previous announcements and provides more details of what is set to be Chanhen’s entry into the power battery market.

Except for June’s 100,000-tons iron phosphate project, Chanhen also said on Sept. 7 that it will set up a joint venture with China’s third-largest battery maker Gotion High-Tech to build a battery raw materials plant in Guizhou.

The project will be split into two phases, each of which has a capacity of 400,000 tons of iron phosphate for EV batteries, to be completed by March 2024 and 2026, respectively, according to yesterday’s statement. The phases will cost CNY4.5 billion (USD700 million) and CNY5.5 billion.

Production lines for chemical products including lithium-ion battery cathode materials and new logistics facilities are also included in the project.

The first phase will also make 200,000 tons of battery-grade iron phosphate a year. The second will have an annual capacity of 20,000 tons of battery-grade lithium hexafluorophosphate, and a yearly output of 100,000 tons of battery-grade lithium iron phosphate.

Some 500,000 tons of iron phosphate in the overall plan will come from the JV, while 100,000 tons of battery-grade iron phosphate will be made from the production line announced in June, the company said in the latest statement.

Iron phosphate is a raw material used to produce lithium iron phosphate, which in turn is the main raw material of lithium-ion battery cathode material. Lithium hexafluorophosphate is the main ingredient of lithium-ion battery electrolytes.

Chanhen supplies phosphorus chemical products, and owns over 530 million tons of high-quality phosphate resources.

Editor: Futura Costaglione