(Yicai Global) May 18 -- Hunan Changyuan Lico, a Chinese battery materials supplier, said it will build a factory in Fujian province at a cost of CNY10 billion (USD1.4 billion) to produce high-performance ternary and lithium iron phosphate cathode materials.

Changyuan Lico has penned a non-binding investment deal with the government of Fuqing city, the
unit of mining giant China Minmetals announced yesterday. This will be its first production base outside of Hunan province, where it has three.

Because of the large investment needed to build the plant, funding will come from Changyuan Lico’s own funds, bank loans, and equity financing, among other sources, the Changsha-based company said. But it is uncertain which way will be used to secure the funds and if enough will be raised, it added.

Changyuan Lico is building the plant in Fujian, which is far from its headquarters, likely because it wants to be close to its customers, an industry insider noted.

Established last year, Changyuan Lico is one of the first Chinese companies to enter the ternary cathode materials field and supplies major lithium battery makers such as Contemporary Amperex Technology, BYD, and EVE Energy.

Changyuan Lico has been growing its capacity in recent years and expanding its business to the lithium iron phosphate cathode materials field to help meet increasing demand for new energy vehicles. It raised CNY3.3 billion (USD471.2 million) through convertible bonds last year and used the proceeds to begin an ongoing hike in its cathode materials capacity.

Shares of Changyuan Lico [SHA: 688779] finished 0.7 percent lower at CNY11.82 (USD1.68) apiece today.

Editor: Martin Kadiev