(Yicai Global) Feb. 23 -- Shares in Guangdong Fangyuan Environment advanced by as much as 4.4 percent today after the Chinese battery cathode materials supplier said it will spend as much as CNY2 billion (USD290.4 million) to build a recycling factory for used lithium iron phosphate batteries, the sort that are used in electric cars, and from this extract lithium iron phosphate cathode materials.

Fangyuan’s share price [SHA:688148] closed up 1.2 percent at CNY15.30 (USD2.22) today. Earlier in the day it hit CNY15.78.

The new facility, which will be located in Jiangmen, southern Guangdong province, will recycle 300,000 tons of lithium iron phosphate batteries a year and from this produce 80,000 tons of lithium iron phosphate cathode materials, Jiangmen-based Fangyuan said yesterday.

This will be Fangyuan’s first foray into the raw materials for lithium iron phosphate batteries and the second scrap battery dismantling plant in which it holds shares, directly or indirectly.

Fangyuan owns a 20 percent stake in Veolia New Energy Technology Jiangmen, which breaks down scrap batteries. Veolia New Energy’s plant is set to start production soon, and the salvaged raw materials will be supplied to Fangyuan’s unit in Jiangmen, a Fangyuan executive told investors last year.

A project company will be set up to manage the investment, construction and operation of the new recycling project. The facility will be constructed in two phases. First the recycling plant will be built and then the facilities to produce lithium iron phosphate cathode materials, Fangyuan said, without giving the construction timetable.

The recycling of lithium resources from old batteries is becoming a hot investment direction. Battery giant Contemporary Amperex Technology said at the end of last month that it will spend CNY23.8 billion (USD3.5 billion) to build a factory to recycle 500,000 tons of scrap batteries a year from which it will extract lithium iron phosphate cathode materials, ternary precursors and cathode-regenerated graphite.

Editor: Kim Taylor