(Yicai Global) Feb. 21 -- Narada Power Source’s shares jumped after the Chinese supplier of energy storage batteries announced a plan to build a lithium battery recycling plant for CNY3.9 billion (USD561 million).

Narada Power [SHE: 300068] closed up 4.8 percent at CNY26.75 (USD3.89) today, after gaining by as much as 5.8 percent earlier.

The plant will be built in two phases in Fuyang, east China’s Anhui province, with the capacity to recycle and handle 150,000 tons of waste lithium batteries a year, the Hangzhou-based company announced late yesterday.

The first phase will mainly house facilities for disassembling used batteries and extracting lithium, with construction scheduled to start in June. The second phase will mainly be a lithium iron phosphate plant and is scheduled to commence construction in June next year. Each of the two phases has a building period of 12 months.

The announcement gave no further details such as the capacity of each phase but said the first phase is expected to make a net profit of around CNY500 million (USD72.8 million) a year and the second phase around CNY440 million annually based on estimates.

Narada Power expects to have made a CNY280 million to CNY330 million net profit last year compared with a CNY1.4 billion net loss the year before, it said at the end of January.

The company mainly attributed the turnaround to its new recycling plant coming on stream. With an annual capacity to handle and recycle 25,000 tons of waste batteries, the plant not only guaranteed supplies for the firm’s lithium battery business but also improved the gross profit margin, according to Narada Power.

Editor: Peter Thomas