(Yicai Global) Dec. 14 -- Shares in Yibin Tianyuan Group soared by the exchange-imposed limit today after the Chinese chemicals producer said it will invest CNY2.4 billion (USD375 million) to build a plant for lithium iron phosphate, a key cathode material used in electric car batteries.

Tianyuan’s stock price [SHE:002386] closed up 10 percent at CNY12.90 (USD2.03) apiece.

The new facility will have an annual capacity of 100,000 tons and should bring in profit of CNY689 million (USD108.2 million) a year, the Yibin, southwestern Sichuan province-based firm said yesterday. It is expected to be up and running in two years’ time.

The company needs to hike output to meet surging demand as sales of new energy vehicles soar. In March it penned a deal with Contemporary Amperex Technology to supply the battery giant with 200,000 tons of the energy storage material over the next 10 years.

Tianyuan’s main businesses produce a huge amount of high-quality iron compounds as chemical by-products. It also owns rich phosphate ore resources. All of this will create cost advantages and guarantee the supply of raw materials to the plant, it said.

The factory will also produce iron phosphate and phosphoric acid, it added.

Editor: Kim Taylor