(Yicai Global) Sept. 16 -- Shares of XTC New Energy Materials slumped after the company said plans to invest CNY10 billion (USD1.6 billion) in a new lithium-ion cathode materials project in southwestern China could weigh on earnings.

XTC’s stock [SHA: 688778] closed 8.3 percent lower at CNY149 (USD23.10) today, after earlier plunging as much as 11.9 percent.

The proposed investment is much more than XTC’s current capital level and may lead to a substantial increase in expenses, adversely affecting net profit, the Xiamen-based company said in a  statement today.

Net profit at XTC jumped 163 percent to CNY251 million in the first half from a year ago, while revenue more than doubled to CNY6.6 billion. It had assets of CNY7.4 billion at the end of the period.

The new facility, to be built in Ya’an, Sichuan province, will have annual output of 100,000 tons of lithium iron phosphate and 60,000 tons of ternary materials.

The first phase of the lithium iron phosphate project will have annual output of 20,000 tons, with an estimated investment of CNY1.2 billion, and it is expected to be put into operation in 2023. The first phase of the ternary materials project, with output of 20,000 tons a year, will cost CNY2.2 billion and will be ready in 2024.

Established in 2016, XTC mainly produces and sells lithium-ion battery cathode materials. It is a wholly owned subsidiary of Xiamen Tungsten, the world’s largest tungsten producer. 

Editor: Tom Litting