(Yicai Global) Oct. 29 -- Shares of Sichuan Road & Bridge and Sichuan New Energy Power soared after the latter announced a cooperation agreement with Chinese power cell and electric vehicle giant BYD to develop phosphate ore resources and build a lithium battery material processing plant.

The stock price of Sichuan Road & Bridge [SHA:600039] rose by the 10 percent exchange-imposed limit to CNY12.25 (USD1.92) today, and later closed at CNY12.02. Sichuan New Energy Power [SHE:002594] ended 3.6 percent up at CNY28.47 (USD4.45), after earlier gaining as much as 8.5 percent.

The pair will join hands with BYD and Mabian Yi Autonomous County Hefeng State-owned Assets and establish a joint venture project company with a registered capital of CNY1 billion (USD156.5 million), Sichuan New Energy Power said in a statement yesterday. No further details about the schedule and production scale of the Mabian-based project were disclosed.

Engineering firm Sichuan Road & Bridge will be the JV’s controlling shareholder by contributing CNY670 million (USD104.8 million) in cash for a 67 percent stake. Sichuan New Energy Power, Hefeng, and BYD will invest CNY200 million, CNY120 million, and CNY10 million (USD1.6 million), respectively.

Investing in non-renewable upstream phosphate ore assets is an important step for the development of the company’s lithium battery materials business as the demand for such batteries is growing rapidly, it added.

Sichuan New Energy Power, which is directly controlled by the Sichuan provincial government, is specializes in lithium battery materials and photovoltaic power generation.

Sichuan Road & Bridge mainly builds infrastructures including roads and bridges, and this is the first time that it is involved in the development of new energy and raw materials projects. It is controlled by an investment firm under the Sichuan provincial government.

Sichuan Energy Industry Investment Group and BYD's affiliate Sichuan Jiaotong Industry Investment Holdings will participate in Sichuan Road & Bridge's CNY2.5 billion (USD391 million) private placement, the Chengdu-based firm said in a statement on Oct. 20.

Editor: Futura Costaglione