(Yicai Global) July 15 -- Shares of Jiangxi Special Electric Motor rose after the Chinese producer of electric machinery and lithium-ion battery materials said net profit soared by at least seven times in the first half because of surging lithium carbonate prices.

After jumping as much as 6.7 percent earlier today, the Shenzhen-listed firm’s shares [SHE: 002176] finished 1.8 percent higher at CNY26.86 (USD3.97) each. The stock has climbed 29 percent since the start of the year.

Net profit likely rose between 606 percent and 678 percent to CNY1.3 billion to CNY1.4 billion (USD189.5 million to USD207 million) in the six months ended June 30, the Yichun-based company said late yesterday. It made CNY181 million (USD26.8 million) a year earlier, an increase of 66 times on the same period of 2020.

Lithium carbonate prices have soared to about CNY500,000 (USD73,915) a ton from between CNY50,000 and CNY60,000 (USD7,390 and USD8,870) early last year because of robust demand, Jiangxi Special Electric said, adding that high prices are the major reason for the company’s strong earnings performance. 

The firm also announced yesterday that it has completed the technical upgrade of its lithium carbonate production line with an annual capacity of 30,000 tons. It can now use lepidolite as a raw material in addition to spodumene, both of which contain lithium compounds.

Jiangxi Special Electric said it will switch between the two materials based on the price and supply to maximize profits. Spodumene costs more because it has a higher lithium purity.

The company has the rights for seven mines in Yichun, Jiangxi province, a city known as the ‘lithium capital of Asia.’ The firm owns and controls 100 million tons of lithium ore and can process over 30,000 tons of lithium salts a year at Yichun.

In April, Jiangxi Special Electric set out plans to invest CNY2 billion in a new, 20,000-ton a year lithium salt processing plant, as well as a lithium ore processing plant.

Last September, the firm inked a long-term supply deal with China’s third-largest power battery maker Gotion High-Tech, which is controlled by German automaker Volkswagen. It will provide the battery maker with at least 500 tons of lithium carbonate a month.

Editor: Futura Costaglione