(Yicai Global) May 26 -- Shares in Ganfeng Lithium Group edged up in Hong Kong and Shenzhen today after the Chinese supplier of key raw materials for new energy vehicle batteries said it is building a new lithium compound plant with a yearly capacity of 50,000 tons, on top of its current output of 124,000 tons, to meet surging demand.

Ganfeng’s Shenzhen-traded shares [SHE:002460] closed up 1.86 percent at CNY121.20 (USD18) while its Hong Kong stock [HKG:1772] finished up 2.03 percent at HKD100.40 (USD12).

Costing CNY2 billion (USD298 million), the factory will be located in Fengcheng, eastern Jiangxi province, an area rich in lithium ore, Ganfeng said yesterday. It will be built in two stages. The first stage will produce 25,000 tons of lithium hydroxide a year. No details were given of the second stage.

At present, Ganfeng produces 81,000 tons of lithium hydroxide and 43,000 tons of lithium carbonate a year. Both are key materials used to make the cathodes in lithium batteries. The Xinyu, Jiangxi province-based company plans to raise its annual capacity of battery-grade lithium carbonate equivalent products to 200,000 tons by 2025, and reach 600,000 tons in the long term, the firm’s board secretary told investors last September.

Ganfeng penned a three-year deal with US electric car giant Tesla in November last year to supply lithium hydroxide to its Shanghai and overseas plants. It is also supplies lithium hydroxide and lithium carbonate to Umicore, a Belgian developer of cathode materials used in EV batteries.

Editor: Kim Taylor