(Yicai Global) Aug. 29 -- Sinoma Science & Technology, a state-owned Chinese producer of special fiber composite materials, plans to invest about CNY6.6 billion (USD954 million) via a unit to build two lithium battery separator plants in the east and west of China.

The new plants will each be able to produce 1 billion square meters of lithium battery separators a year, Beijing-based Sinoma Science said late on Aug. 26, adding that it will also invest an additional CNY2.2 billion to inject extra capital into the subsidiary, Sinoma Lithium Battery Separator.

One plant will be built in Pingxiang, Jiangxi province, and the other in Yibin, Sichuan province. CNY3.2 billion will go to the Jiangxi production line, which is due to be completed in 26 months, and CNY3.3 billion will be invested in the Sichuan facility, which should be finished in 21 months.

Shares of Sinoma Science [SHE: 002080] edged up 0.5 percent in Shenzhen today to close at CNY24.46 (USD3.54) apiece. The benchmark Shenzhen Component Index fell 0.3 percent.

Sinoma Science will also boost its stake in Sinoma Lithium Battery Separator to almost 70 percent from about 59 percent by buying a further 10.3 percent from an investment fund under Shanghai-listed Changyuan Technology Group, it added.

After the share buying process, Sinoma Science plans to introduce as many as five strategic investors through public bidding to Sinoma Lithium Battery Separator to make sure the subsidiary has enough funding to expand its lithium battery separator capacity, the firm noted, adding that it will also invest at least CNY1.5 billion in the unit through the process.

Sinoma Science’s stake after that is not yet known because the other investors and their investment amount have not been decided, but it will retain control according to its investor solicitation notice, it added. 

Based in Shandong province, Sinoma Lithium Battery Separator’s annual capacity of lithium battery separators has risen to 1.5 billion sqm as of now, and is expected to rise to 1.6 billion sqm by the end of this year, a senior manager at its parent told investors earlier this month. 

The expansion is going to accelerate in the next three years as the unit’s lithium battery separator capacity is expected to add 1.5 billion sqm to 2 billion sqm annually during the period, the senior manager added, with the aim of reaching 7 billion sqm by 2025.

Sinoma Science sold just 500 million sqm of lithium battery separators in the first half. It made a first-half net profit of CNY140 million (USD20.3 million) on revenue of CNY690 million from sales of the products, the company said in an earnings report released on Aug. 17.

Editor: Peter Thomas