(Yicai Global) Feb. 25 -- Shares of Shangji Automation jumped after one of China's major solar wafer makers said it intends to spend CNY11.8 billion (USD1.9 billion) to ensure its supply of increasingly expensive solar panel raw materials.

Shangji's stock price [SHA: 603185] surged as much as 7.9 percent to CNY158.8 (USD25.10) intraday. 

The company will build a new plant in the energy-rich Inner Mongolia Autonomous Region to make 150,000 tons of high-purity industrial silicon and 100,000 tons of high-purity polysilicon per year, the Wuxi-based firm said in a statement yesterday.

Industrial silicon is a raw material to make polysilicon which is used to produce Shangji's primary product, monocrystalline silicon wafers. Prices of polysilicon almost tripled last year due to robust demand, creating great raw material cost pressures for midstream and downstream firms such as Shangji.

China’s solar panel market is booming. In 2022, the country's polycrystalline silicon output will rise to around 700,000 tons, according to industry insiders. Last year, China produced 505,000 tons of polycrystalline silicon, based on statistics from the Ministry of Industry and Information Technology.

The above-mentioned factory will be built in two phases. The first one should be ready next year and form an annual capacity of 80,000 tons of industrial silicon and 50,000 tons of polysilicon. The second phase will be started according to market conditions.

Shangji currently has a 30-gigawatt monocrystalline silicon wafer capacity, and its demand for raw materials is growing quickly, the firm added.

Editor: Emmi Laine, Xiao Yi