(Yicai Global) Oct. 18 -- Shanshan, a major Chinese producer of battery materials, said it plans to raise as much as CNY6 billion (USD834 million) from a private placement of shares to finance an expansion of the firm’s production capacity.

The funds raised will mainly be spent on a 300,000-ton lithium battery anode material project in China’s southwestern Yunnan province, the Ningbo-based company said in a statement late yesterday.

Shanshan’s capacity to produce lithium battery anode materials is becoming increasingly tight, with demand exceeding supply, it said. The firm can turn out 180,000 tons of anode materials a year, while its annual graphitization capacity is only 94,000 tons, so it relies highly on external production.

The company plans to spend CNY4.2 billion of the new funding on the Yunnan project to build anode material production lines integrating all processes, and use CNY1.8 billion to replenish working capital.

Shanshan is a major supplier to global lithium battery giants Contemporary Amperex Technology, Amperex Technology, and BYD. the firm ranked second in the industry in terms of anode material sales in the first half of the year, according to ICC’s battery data.

Shanshan’s advantage of scale in lithium battery anode material production will increase further, with a 200,000 ton project in Meishan, Sihuan province, the 300,000 ton project in Anning, Yunnan, and a 400,000-ton project in Ningbo coming onstream, according to the firm’s half-year earnings report.

In the first six months of this year, Shanshan had revenue of CNY10.8 billion (USD1.5 billion), up 8.3 percent from a year earlier, and net profit of CNY1.7 billion, a 119 percent gain.

Shanshan plans to invest more than CNY22 billion over the next three years in three battery anode material projects, which were started this year, it said earlier.

Shares of Shanshan [SHA: 600884] closed down almost 1 percent at CNY20.97 (USD2.91) today.

Editor: Peter Thomas