(Yicai) Oct. 24 -- Shares of Sichuan Development Lomon rose after the Chinese phosphate miner and fertilizer producer set out a plan to invest CNY362 million (USD50.8 million) in building another lithium battery raw materials plant, its second lithium dihydrogen phosphate project announced in less than four months.

After surging by as much as 8 percent this morning, SD Lomon [SHE: 002312] closed 3.7 percent higher at CNY11.02 (USD1.57) a share today. The broader Shenzhen market rose 2 percent. The stock has fallen 24 percent since the end of last year.

The new plant, to be located in the Deyang-Aba Ecological Economic Industrial Park in Mianzhu, Sichuan province, will have an annual production capacity of 100,000 tons of lithium dihydrogen phosphate, the Chengdu-based firm announced late yesterday. Construction should take 12 months.

Lithium dihydrogen phosphate, which is facing a supply shortage, is a key raw material used to make high-compaction-density lithium iron phosphate. Lithium batteries made from this type of LFP have a higher energy density and are better fast-charging batteries than those made with ordinary LFP.

Compared with the ternary lithium batteries widely used by global electric carmakers, LFP power packs are cheaper to produce, safer, and more environmentally friendly. 

The market for lithium dihydrogen phosphate is booming amid growing demand for lithium batteries, creating the need for more upstream raw material production, according to SD Lomon.

The company had revealed a plan in early July to jointly build a plant with Fulin Precision in the same industrial park to produce high-compaction-density LFP and its key raw materials -- lithium dihydrogen phosphate and ferrous oxalate -- each with an annual production capacity of 100,000 tons.

Fulin Precision unit Shenghua New Material is a core supplier of LFP cathode materials to Chinese battery giant Contemporary Amperex Technology.

SD Lomon has been expanding its lithium battery materials business by leveraging its phosphate mining resources and phosphorus chemical manufacturing know-how to meet demand from the rapid growth of emerging new energy industries.

Its annual production capacity of LFP, for which iron phosphate serves as a key raw material, reached 60,000 tons as of the end of last year, with another 40,000 tons under construction, while that of iron phosphate reached 150,000 tons, according to the firm’s annual earnings report.

Editor: Martin Kadiev