(Yicai) Aug. 21 -- Shares of Lopal Technology fell after the leading Chinese lithium-iron phosphate cathode materials supplier said it will invest CNY1.8 billion (USD250 million) to expand its production capacity to meet growing demand from battery clients both domestic and international.

Lopal [SHA: 603906] closed 3.5 percent lower at CNY14.60 (USD2.03) a share today. The broader Shanghai stock market climbed 0.1 percent.

Lopal, which ranks among the top three LFP cathode material suppliers worldwide, plans to raise CNY2 billion through a private placement of shares, using CNY1.4 billion for two capacity expansion projects and the rest to supplement its working capital, the Nanjing-based firm announced late yesterday.

The remaining CNY400 million (USD55.7 million) for the new projects will be raised from banks or internal funds, Lopal noted, adding that it will expand the production capacity of its factories in Heze in eastern Shandong province and Xiangyang in central Hubei province for additional 110,000 tons and 85,000 tons of LFP cathode materials, respectively.

"The two new projects will prioritize the production of the fourth-generation ultra-high energy density LFP cathode materials, while also having the capability to produce other high-performance phosphate-based cathode materials," Lopal said.

Compared with the ternary lithium batteries widely used by international electric vehicle makers, LFP batteries are cheaper to produce, safer, and more environmentally friendly. 

Over the past year, Lopal has bagged orders for LFP cathode materials from domestic and foreign battery giants, including Contemporary Amperex Technology, LG Energy Solution, and BlueOval. In addition, its Indonesian factory began bulk shipments this year.

Lopal's LFP cathode materials production surged 56 percent to 184,700 tons last year from the previous year, while sales soared 65 percent to 178,300 tons, according to the company's annual financial report. Its related revenue topped CNY5.7 billion, accounting for 75 percent of its total income.

Editor: Martin Kadiev