(Yicai Global) Feb. 1 -- Chaohua Technology’s shares rose after the Chinese electronic components maker said it will invest CNY12.3 billion (USD1.9 billion) to build a new production base in southwestern China in a bid to become the world's largest maker of electronic-grade copper foil. 

Chaohua Technology [SHE: 002288] closed 4 percent higher today at CNY8.73 (USD1.35), after earlier climbing as much as 7.6 percent. The benchmark Shenzhen Component Index rose 1.4 percent.

The new plant will turn out an annual 100,000 tons of copper foil used in batteries after the factory is fully ready, the Guangdong province-based company said in a statement today. After three years of building work, the plant will be able to produce 50,000 tons a year and the second phase should raise output as much again within a similar period. 

Demand for copper foil used in energy storage has rapidly increased, driven by the development of the solar and wind power sectors, the electronic components maker said.

The plant will be located in Yuchai Industrial Park in Yulin city in Guangxi Zhuang Autonomous Region. The park will provide capital and financing guarantees for the project but after it is ready, Chaohua will buy back the assets in stages, based on their agreement.

At the moment, Chaohua can make 20,000 tons of electronic copper foil a year, and was already in the process of adding 20,000 tons extra. Last October, the firm said it will invest CNY750 million (USD116.1 million) to set up a production line in its home town for a further 10,000 tons of high-precision ultra-thin copper foil each year.

Editor: Emmi Laine