(Yicai Global) Aug. 23 -- Tonze Electric and Ruitai New Energy Materials, a unit of trading company Guotai International Group, plan to jointly invest CNY3 billion (USD462 million) to expand the home appliance maker’s production of a key ingredient of electrolyte materials commonly used in lithium-ion batteries.

The pair will set up a joint venture to build a new plant in Changsu, in China’s eastern Jiangsu province, to meet strong demand amid surging prices for lithium hexafluorophosphate, Guangdong province-based Tonze Electric said in a statement on Aug. 20. It did not disclose the JV shareholding ratio or the construction schedule.

The price of lithium hexafluorophosphate, which makes up about 40 percent of the cost of lithium battery electrolytes, jumped four-fold this year to CNY400,000 (USD61,675) a ton at the end of last month.

Tonze Electric entered the lithium battery materials field through mergers and acquisitions in 2016. It can make 8,160 tons of lithium hexafluorophosphate a year, and produced 4,186 tons in the first half of this year, according to the firm’s latest earnings report. Sales of the material accounted for 82 percent of Tonze Electric’s total revenue in the first six months of the year.

China produced 21,320 tons of lithium hexafluorophosphate in the first six months of 2021, up 134 percent from a year ago, and nearly the same amount as in 2019, per statistics from Shanghai Xinluo Network Technology’s Iccsino. Many other listed companies announced plans to increase output before Tongze Electric.

Shares of Tonze Electric [SHE:002759] ended little changed today at CNY39.67 (USD6.11) each. Suzhou-based Guotai International [SHE:002091] ended up 7.4 percent at CNY13.13 (USD2.03).

Editor: Futura Costaglione