(Yicai Global) March 1 -- Shares in Lihuayi Weiyuan Chemical advanced as much as 4.2 percent today after the Chinese chemicals producer said it is paying Japanese chemicals firm Ube Industries JPY300 million (USD2.6 million) for the rights to produce a high-purity additive agent used to make electric car battery electrolytes.

Lihuayi Weiyuan’s share price [SHA:600955] closed up 2.72 percent at CNY43.85 (USD7). Earlier in the day it had hit CNY44.50.

The deal, which came into effect on Feb. 25 and will be valid for two decades, will permit Lihuayi Weiyuan to produce 20,000 tons of battery-grade high-purity dimethyl carbonate a year, the Dongying, eastern Shandong province-based company said yesterday. The product will only be available for sale in the China market. No timetable was given for the start of production.

The collaboration is an important step for Lihuayi Weiyuan to become a supplier of chemical ingredients for EV battery electrolytes, it said. The electrolytes made with high-purity dimethyl carbonate are found in a wide range of lithium-ion batteries, such as car batteries and those used in consumer electronics. It will enrich the company’s portfolio and improve its market competitiveness, it added.

Lihuayi Weiyuan is preparing to use its own ordinary-purity dimethyl carbonate as the raw material to produce the high-purity version. In December 2020, the firm obtained the marketing and technology license from Yamaguchi-based Ube to make 100,000 tons of ordinary-purity dimethyl carbonate a year and this factory is expected to be ready at around the same time as the high-purity plant.

Editor: Kim Taylor