(Yicai Global) Aug. 23 -- Royal Group’s shares surged after the Chinese dairy producer said a unit will invest CNY10 billion (USD1.5 billion) to build a plant to make solar cells and modules.

Royal [SHE: 002329] jumped 10 percent to end today at CNY9.89 (USD1.44) a share, nearing a price level not seen since May 2017.

Royal has agreed with the economic development zone of Fuyang city, Anhui province, to build a plant for 20 gigawatt ultra-efficient solar cells and 2 GW solar modules a year, the Nanning-based company said late yesterday.

The first phase, with an annual capacity of 10 GW of batteries and 2 GW of modules, is due to come online by next June 1, while the second phase will add the final capacity by a year later, Royal said.

The first phase will be finished at the same time as a 20 GW solar silicon wafer plant being built in the zone by another firm to guarantee smooth supplies. Royal also may bring in a third-party investor to share the cost, it added.

The plant is expected to have at least CNY17 billion in annual sales and at least CNY400 million (USD58.3 million) in annual taxable sales, Royal said.

Royal Nongguang Hubu Guangxi Technology, in which Royal has a 45 percent stake, will set up a project company to oversee construction work.

The plant is part of Royal’s expansion into the solar energy industry. The firm announced on Aug. 17 that it will build a pasture to raise 10,000 cows and a dairy products deep-processing plant in Fuyang. Spare land in the ranch and the roof of the plant will be used for distributed power stations.

That statement also revealed that a unit of PetroChina will invest and build solar power stations, with a 1,300 megawatt capacity, in Royal’s pasture and plant. The firm will earn site rental fees and discounts to buy electricity via the tie-up, and its dairy products will enter the huge retail network of PetroChina’s gas stations.

Editor: Peter Thomas