(Yicai Global) June 28 -- Shares in Qinghai Salt Lake Industry surged as much as 6.7 percent today after the Chinese potash giant said that its new plant for lithium carbonate, a core raw material used to make electric car batteries, became fully operational this week.

Qinghai Salt Lake’s share price [SHE:000792] closed up 5 percent at CNY31.48 (USD4.70). Earlier in the day it had hit CNY32.

The battery-grade lithium carbonate plant with an output of 20,000 tons a year achieved full-load production on June 26 and has met the required standards, the Golmud, western Qinghai province-based firm said yesterday. Together with a unit’s existing annual capacity of 10,000 tons, the firm now has a daily output of over 100 tons.

The country’s leading supplier of potash fertilizer has the rights to Qarhan Salt Lake, one of the largest salt lakes in the world with an area of 5,856 square kilometers. It is estimated to contain reserves of 540 million tons of potassium chloride, 4 billion tons of magnesium chloride, 12 million tons of lithium chloride as well as 55.5 billion tons of sodium chloride.

As the new energy vehicle market booms, Qinghai Salt Lake has been looking to tap into the lucrative battery materials sector. Strong demand has driven up the price of battery-grade lithium carbonate more than five-fold in the past year to CNY446,200 (USD66,618) per ton in the first half.

Qinghai Salt Lake holds an obvious cost advantage over competitors as it can reuse the brine produced from potash production to extract lithium salts, company executives told investors in May.

Last month, Qinghai Salt Lake said it will invest nearly CNY7 billion (USD1 billion) to build a lithium salt processing plant at Qarhan Salt Lake with a yearly output of 40,000 tons. It is also teaming up with electric car and battery manufacturer BYD on another lithium carbonate plant with an annual capacity of 30,000 tons.

Editor: Kim Taylor