(Yicai Global) June 15 -- Huayou Cobalt has announced it will invest CNY7.7 billion (USD1.2 billion) in two new plants to produce raw materials for ternary power lithium batteries, and it will raise the funds by issuing convertible bonds.

The Zhejiang-based lithium battery material maker said the plant in Guangxi will cost CNY6.3 billion and will produce high-nickel ternary cathode materials for lithium batteries with an annual capacity of 50,000 tons, as well as producing nickel sulfate and ternary precursor materials for high-purity batteries.

The plant in Quzhou will produce ternary precursor materials for power batteries, with an annual capacity of 50,000 tons, and will cost CNY1.4 billion, the firm’s announcement said, noting it will take two years to build the two plants.

The construction period includes an after-tax payback period of over six years, the announcement stated, adding that the firm’s profitability will be improved after the projects go into operation.

The company will issue convertible bonds worth CNY7.6 billion in the next 12 months and will use CNY4.6 billion in the Guangxi project and CNY1 billion in the Zhejiang project. The remaining CNY2 billion will supplement the firm’s working capital, it said.

Huayou Cobalt [SHA:603799] closed up 0.62 percent at CNY98.70 (USD15.41) per share today, bucking the downward trend in China’s stock market indexes.

Editor: Tom Litting