(Yicai Global) July 26 -- LB Group’s stock price gained after the Chinese chemicals producer announced a plan to enter the market for lithium-ion battery raw materials.

LB [SHE:002601] closed 2.2 percent higher today at CNY31.45 (USD4.85), after earlier jumping as much as 7.8 percent. The broader Shenzhen market fell 2.7 percent.

LB's subsidiary Henan Baili New Energy Materials and Hubei Wanrun New Energy Technology will set up a joint venture plant owned 51 percent and 49 percent, respectively, Henan province-based JB said in a statement late yesterday. The plant will be based in Nanzhang county, Hubei province, and will be able to produce 100,000 tons of ferric phosphate a year.

Anhui Annada Titanium Industry, Cnnc Hua Yuan Titanium Dioxide and other listed Chinese titanium dioxide makers have also previously set out plans to move into the ferric phosphate market.

LB, a leading titanium dioxide supplier, already has a titanium dioxide manufacturing firm in Nanzhang. Ferrous sulfate is a by-product of titanium dioxide production and is a core raw material for lithium iron phosphate, the main ingredient for lithium-ion battery production.

The rapid growth of China’s electric vehicle sector has led to a 30 percent gain in prices of lithium iron phosphate products in the first half and has also boosted prices of ferric phosphate. This has stimulated many domestic titanium dioxide producers to invest in related projects.

LB said the JV will have registered capital of CNY100 million (USD15.4 million), adding that the project is expected to start full operation within 12 months of construction starting.

Editor: Tom Litting