(Yicai Global) Dec. 2 -- China's LB Group intends to partner with a local government to invest a total of CNY2 billion (USD314 million) to further increase its output of an increasingly expensive battery cathode material.

LB penned an agreement with Nanzhang's county-level government in central Hubei province to set up a joint venture to build a plant to produce 150,000 tons of lithium iron phosphate per year, the Henan province-based leading titanium dioxide supplier said in a statement yesterday. The firm already operates a titanium dioxide facility in the county.

LB, among others, has been boosting its output of lithium iron phosphate while prices of the popular cathode material for electric vehicle batteries have almost doubled this year. But LB has an advantage in the field. Its titanium dioxide production involves a by-product of ferrous sulfate, a major raw material of ferric phosphate which in turn can be used in developing lithium iron phosphate.

The Nanzhang plan is not new but it has expanded along the way. In July, the firm said it will build the facility but it was only aiming for an annual capacity of 100,000 tons at that time.

The chemical manufacturer will have 51 percent of the new JV's equity. After the first phase, the factory will produce ferric phosphate. After the second phase, it will make battery-level lithium iron phosphate.

In August, LB revealed two output expansion plans in Henan province. One of them is a lithium iron phosphate project with an investment of CNY2 billion and an annual capacity of 200,000 tons. The other one is a ferric phosphate project with an investment of CNY1.2 billion and a capacity of 200,000 tons. Both of the plants will be making use of the firm's by-products.

LB's stock price [SHE: 002601] climbed 2.6 percent to close at CNY28.89 (USD4.50).

Editor: Emmi Laine, Xiao Yi