(Yicai Global) Feb. 16 -- Shares of Yongxing Special Materials Technology rose after the Chinese firm said it will build a plant with partners to supply battery-grade lithium carbonate to a factory of Contemporary Amperex Technology.

Yongxing [SHE: 002756] surged more than 6 percent this morning, before paring the gain to close 2.1 percent up at CNY133.87 (USD21.13).

The plant will be built in Yichun in China’s Jiangxi province and have an annual capacity of 20,000 tons of lithium carbonate, the Huzhou-based company said in a statement late yesterday. Its output will supply a local facility of Chinese battery giant CATL.

It is the second time in the space of a month that Yongxing has announced plans for a new joint venture plant to produce lithium carbonate in Yichun.

On Jan. 27 the firm said it will set up a JV with CATL, which will own 70 percent, and plans to invest CNY2.5 billion (USD394.7 million) to build a lithium carbonate plant with annual output of 50,000 tons. Products from that plant will also go first to CATL and its affiliates.

The plan disclosed yesterday did not give details on the level of investment or a construction schedule. Jiangxi Tungsten Holding Group, which controls the local mining assets, will have a 51 percent stake, with Yongxing owning the rest.

The project will have two phases. The first phase will build annual capacity of 10,000 tons, with Jiangxi Tungsten supplying the lithium ore and Yongxing production technology, it said.

Yongxing began expanding into the lithium battery materials business in 2017. The firm has already invested in the construction of another 30,000-ton battery-grade lithium carbonate plant in Yichun, of which 10,000 tons of annual production capacity has been completed and put into operation in July 2020.

Dubbed the ‘lithium capital of Asia,’ Yichun has proven lithium resources equivalent to about 6.42 million tons of lithium carbonate. CATL announced last September that it would invest and build a new power battery production base in Yichun for no more than CNY13.5 billion (USD2.1 billion).

The project’s annual production capacity will reach 50 gigawatt hours after it starts operation, with the construction period not exceeding 30 months, CATL said.

Editor: Peter Thomas