(Yicai) Jan. 5 -- Capchem Technology, a Chinese supplier of fine chemical products, said it plans to invest USD260 million building a lithium-ion battery electrolyte solvent plant in Saudi Arabia and up to CNY200 million (USD28.6 million) to hike the production capacity of its electrolyte plant in Poland.

The Saudi factory will be located in the Yanbu Heavy Industrial Park, with Capchem as the sole owner in the initial stage, the Shenzhen-based firm announced late on Dec. 31, noting that it plans to bring local third-party investors later to boost localization efforts.

The new factory will have production lines making 200,000 tons of carbonate solvents and 100,000 tons of ethylene glycol a year and include supporting public utilities, environmental protection facilities, warehousing and logistics systems, and safety protection facilities, Capchem said. Construction should take no more than three years.

Carbonate solvents are the core component of lithium-ion battery electrolytes, while ethylene glycols are a key upstream raw material to produce carbonate solvents.

The Saudi plant will help Capchem enhance its international production capacity layout and develop its global supply chain, ensure the stable supply of core raw materials for its overseas electrolyte factories, such as the Polish one, reduce cross-regional logistics costs and supply chain risks, enhance the service response efficiency and cooperation stickiness for international core clients, and expand the overseas third-party consumer market, according to the company.

Building an electrolyte solvent plant in Saudi Arabia can leverage the country's superior geographical location and mature logistics network to efficiently serve the European and Southeast Asian markets, Capchem noted. It will also supply the US market before the company's factory in the United States goes live, it added.

In a separate announcement on the same day, Capchem said it will commence building the second phase of its Polish factory in Śrem, expanding its electrolyte annual production capacity by 50,000 tons. Construction should take no more than two years.

The plant will effectively fill the supply gap of lithium-ion battery electrolyte in Europe after the second phase becomes operational, Capchem said. In addition, it will strengthen the company's supply capacity on the continent and improve the response efficiency and service quality for European customers.

The first phase of the factory in Poland, with an annual capacity of 40,000 tons of lithium-ion battery electrolyte, went live in April 2023. It counts LG Energy Solution, Samsung SDI, the battery unit of German auto giant Volkswagen Group, and Ultium Cells' plant in Ohio among its clients.

Capchem is also building or planning to build electrolyte and component chemical plants in Ohio and Louisiana, while its electrolyte factory in Malaysia has been partially completed and put into operation.

Capchem is one of the world's top suppliers of lithium-ion battery electrolyte and its component chemicals, with its global electrolyte market share reaching 15 percent to 16 percent in the first half of last year, according to data from South Korean market research provider SNE Research.

Shares of Capchem [SHE: 300037] rose 2.4 percent to CNY53.68 (USD7.69) in Shenzhen today. The stock surged 43 percent throughout last year.

Editor: Martin Kadiev