(Yicai Global) Sept. 29 -- Shares of Tinci Materials Technology closed lower after the leading Chinese maker of lithium battery electrolyte unveiled a plan to invest CNY935 million (USD144.5 million) building a new electrolyte additive plant.

Tinci’s stock price [SHE: 002709] finished today 1.4 percent down at CNY138.29 (USD21.39), after earlier climbing by as much as 4.7 percent. The broader Shenzhen market came off 1.6 percent.

Tinci plans to build a new production plant for vinylene carbonate, a lithium-ion battery electrolyte additive, in Quzhou in China’s Zhejiang province, the Guangzhou-based firm said in a statement late yesterday. VC is a key additive in lithium-ion battery electrolyte used to improve overall battery performance.

The plant will have annual production capacity of 41,000 tons in two phases, with 20,000 tons added in the first phase within 24 months, filling the raw materials supply gap caused by rapid growth in power battery demand, Tinci said.

The company expects the 20,000-ton capacity to generate average net profit of CNY237 million a year on average revenue of CNY2 billion (USD309.2 million).

Tinci has been expanding production capacity of lithium-ion battery electrolyte and its main raw materials. Late last month it announced three projects to boost output of electrolyte additive chemicals and one to recycle waste batteries. The projects were worth CNY5.3 billion in total, but did not include VC.

Due to strong demand, the price of VC has risen to CNY500,000 (USD77,324) a ton from CNY150,000 over 12 months.

That combined with higher prices of other additives has pushed up the share of the cost of additives in electrolytes to 25 percent, second only to the about 50 percent share of the main ingredient, lithium hexafluorophosphate.

Editor: Peter Thomas