(Yicai Global) May 31 -- Huayou Cobalt’s shares rose after the major Chinese supplier of battery raw materials said it will buy a stake in a unit of South Korean electric vehicle battery maker LG Chem to produce ternary cathode material for lithium-ion batteries.

Huayou Cobalt [SHA: 603799] closed 4.2 percent higher at CNY94.48 (USD14.17) in Shanghai today.

Huayou Cobalt’s unit Tianjin B&M Science & Technology plans to spend KRW51.4 billion (USD41.6 million) to acquire 49 percent of LG Battery Core Material, according to a deal the pair signed on May 30, the Zhejiang province-based company, which owns mineral resource development rights in Africa, said in a statement yesterday.

The new joint venture, to be renamed LG-HY BCM, plans to invest KRW437.1 billion (USD352 million) to build a factory in South Korea with an annual capacity of 66,000 tons of ternary cathode material, Huayou Cobalt said.

The first phase of the project will have a capacity of 30,000 tons a year and will be completed by 2024. The plant will gradually increase output to 66,000 tons by 2027.

The JV project will help to integrate the advantages of both sides in raw materials, technologies, and market channels as well as cooperate in raw material supply, product research and development, and market development to jointly build an internationally competitive lithium-ion battery materials industry chain, the firm said.

As much as 60 percent of the construction cost, equal to KRW262.3 billion, will come from the JV owners based on their respective stakes. The JUV will raise the remainder through loans or corporate bonds, Huayou Cobalt said.

Editor: Futura Costaglione