(Yicai Global) Sept. 6 -- Shares in Chengdu Wintrue Holding jumped over 9 percent today before rapidly paring gains as investors cashed in, after the Chinese phosphate miner said it will spend CNY4.6 billion (USD712.5 million) to boost capacity of battery-grade ferric phosphate, a key raw material needed to make the lithium iron phosphate used in electric car batteries.

Wintrue’s share price [SHE:002539] closed down 3.55 percent at CNY15.77 (USD2.44). Earlier in the day it had surged to a six-year high of CNY17.89. The stock has more than doubled since the start of the year.

The factory, to be located in Songzi, central Hubei province, will have a production capacity of 350,000 tons a year, said the firm, formerly known as Chengdu Shindoo Chemical Industry. The first phase, which should be ready by March 2023, will produce 100,000 tons and the second phase should be in place by the end of 2023.

The new plant will allow Wintrue, which has been mainly engaged in the production of compound fertilizers and phosphorus chemicals, to better meet demand in the fast-growing EV battery sector, it said. China produced 37.7 gigawatt hours of batteries in the first half, more than four times than a year earlier. As a result, the price of lithium iron phosphate has gained 45 percent since the start of the year.

Chengdu, southwestern Sichuan province-based Wintrue controls a phosphorus chemical industry chain with proven reserves of 181 million tons, it said.

Editor: Kim Taylor