(Yicai Global) Oct. 21 -- The stock price of China's Fengyuan Chemical rose today after the firm said that it will invest CNY586 million (USD82.7 million) to construct a factory to meet the growing demand for new energy vehicle batteries that use energy-dense nickel systems instead of the expensive cobalt ones.

Fengyuan's [SHE: 002805] share price jumped 4.2 percent to CNY13.13 (USD1.86) this afternoon.

Fengyuan will build a high-nickel ternary cathode material plant in its home town Zaozhuang with an annual output of 10,000 tons, the Shandong province-based firm said in a statement yesterday. The construction period is expected to be 24 months.

Car manufacturers need increasingly energy-efficient batteries and the prices of cobalt are high so nickel cathode batteries are bound to become mainstream, the firm added. After completion, the company expects its annual revenue to climb to CNY2 billion (USD282.4 million) with a net profit of CNY200 million (USD28.3 million). 

Fengyuan's existing production line with an annual capacity of 5,000 tons of ternary cathode materials per year has been running at full capacity, and the firm has established business contacts with well-known battery manufacturers at home and abroad so the expansion will improve the firm's competitiveness, it added. 

Editor: Emmi Laine