(Yicai Global) Aug. 31 -- Ganfeng Lithium plans to invest CNY21.3 billion (USD3.1 billion) to expand its ability to make power batteries after first-half earnings soared.

CNY19.3 billion will go on lifting annual production capacity at three lithium battery plants by a combined 36 gigawatt-hours, while the rest will be used to build a polymer lithium battery plant, the Xinyu-based company said late yesterday.

Ganfeng said it will invest CNY9.6 billion (USD1.4 billion) to build a battery plant with annual capacity of 20 GWh in southwestern China’s Chongqing. In addition to lithium iron phosphate batteries, the plant will also make second-generation solid-state lithium batteries. Construction is scheduled to wrap up within 18 months.

Ganfeng also plans to invest CNY6.2 billion (USD899.6 million) to build a plant with an annual production capacity of 10 GWh in Xinyu, and intends to complete the building work and put the project into production by October 2023.

Ganfeng first announced plans to build plants in Chongqing and Xinyu last August. The total investment it disclosed at the time was CNY8.4 billion, with a total annual battery production capacity of 15 GWh. But the company said it has raised the proposed capacity of the two plants to meet surging demand from carmakers.

Beside the two above mentioned capacity expansion projects, Ganfeng plan to spend another CNY3.5 billion to build a second power battery production plant in Xinyu, with an annual capacity of 6GWh, the announcement said, but it did not mention the timetable for the construction.

Ganfeng has another plan to invest CNY2 billion to build a small polymer lithium battery production plant, also in Xinyu. The first phase of the project is scheduled to output 250 million lithium batteries per year for wireless headphones, according to the firm.

Ganfeng is one of China’s major suppliers of lithium salts, a raw material used for batteries, but in recent years it has been expanding into downstream battery segments, according to its website. The solid-state battery it co-developed with Dongfeng Motor went into mass production in early 2022. 

Lithium salts remain its main source of income though. Ganfeng’s designed lithium carbonate annual capacity is 43,000 tons, with designed annual output of lithium hydrate at 81,000 tons, an executive disclosed in early June. 

Ganfeng’s first-half net profit soared 412 percent to CNY7.3 billion from a year earlier, and revenue popped 255 percent to CNY14.4 billion, driven by big increases of lithium salt demand and prices, per the first-half results it released late yesterday. 

Revenues from the lithium salt and battery products made up 84.03 percent of the total, increasing 309.93 percent on the year to CNY12.1 billion. Of which, sale revenue from battery products increased 146.06 percent on the year to CNY1.88 billion.

But the plan to further expand downstream into the lithium battery field failed to boost Ganfeng’s share price today. Ganfeng [SHE:002460] closed down 5.4 percent at CNY85.7 (USD12.40), close to the lowest level since December 2020 and about 60 percent below a record high set last September.

Editor: Tom Litting