(Yicai Global) Nov. 8 -- Shares of China's Huayou Cobalt soared after the firm said it will start producing another type of new energy vehicle cathode material, lithium iron phosphate, to expand its market share.

Huayou's stock price [SHA: 603799] rose by the daily limit of 10 percent to CNY122.34 (USD19.10) intraday and closed 9.8 percent up. The shares have climbed more than 40 percent this year amid the booming NEV sector.

The foray into making this new type of lithium-ion battery cathode material is a key move by Huayou to transform and upgrade into a leading player in the global electric vehicle battery sector, the Zhejiang province-based firm said in a statement recently.

Lithium iron phosphate and ternary precursor are the two main cathode materials for NEV batteries. Before this, Huayou has been focusing on the latter category, serving clients such as LG Chem, Contemporary Amperex Technology, and BYD.

The plan involves a transaction with a related party. Huayou's unit in Tianjin will buy all of Shengfan Technology New Energy's equity from its controlling shareholder Huayou Holding by cash or by issuing new shares, based on the parties' agreement. The price of the stake is subject to asset appraisal.

Shengfan owns a lithium iron phosphate plant in the Inner Mongolia Autonomous Region. The factory's annual capacity is expected to increase to 75,000 tons from the current 15,000 tons after the acquisition.

In another recent statement, Huayou announced it will cooperate with Xingfa Chemicals Group to build a joint venture in central China's Hubei province. The JV's designed annual output should be 500,000 tons of lithium iron phosphate.

Xingfa's shares [SHA: 600141] closed 1.6 percent up at CNY40.71 (USD6.40) today. The stock price has more than tripled this year.

Editor: Emmi Laine, Xiao Yi