(Yicai Global) Sept. 8 -- Lopal Tech’s shares sank after the Chinese supplier of lithium battery materials announced a plan to develop a lithium processing project with battery titan Contemporary Amperex Technology.

Lopal Tech’s stock price [SHA: 603906] dropped more than 7 percent this morning before ending the day 4.6 percent lower at CNY33.15 (USD4.76).

Lopal Tech will work with CATL to build a lithium carbonate plant in Yichun, Jiangxi province, known as Asia’s lithium capital, the Nanjing-based company said late yesterday. With an estimated investment of up to CNY1.5 billion (USD215.6 million), the plant will have an annual production capacity of 30,000 tons.

This is the first time that Lopal Tech has expanded its business to upstream lithium carbonate production in the battery industrial chain. The supplier of fine chemical products has been actively promoting the lithium battery cathode material business in recent years.

A joint venture formed by three partners will invest in building the project. Lopal Tech will hold a 71 percent stake in the JV, lithium carbonate processing services provider Tangshan Xinfeng Spodumene Mining will own 10 percent, and CATL unit Yichun Contemporary Amperex Resources 19 percent.

Lopal Tech did not provide more details about the JV, but said that the plant will be built within seven months once construction conditions are met at the site.

Thwarted Plans

News of the tie-up came after another lithium battery material supplier Yongxing Special Materials Technology announced the termination of its cooperation with CATL on Sept. 5. They had penned a deal in January and agreed to end it because “some new problems have emerged during the preparation of the project,” Yongxing said.

The first phase of the lithium carbonate processing project, announced by Yongxing in January, based on its cooperation with CATL, also had an annual production capacity of 30,000 tons, with an estimated investment of CNY1.5 billion. The raw materials for the production were from local mines owned by CATL.

Liyuan New Energy Technology, controlled by Lopal Tech, is a supplier of lithium iron phosphate battery cathode materials, per the announcement. CATL is one of its major clients. Lithium carbonate is a main raw material in producing lithium iron phosphate, a cathode material for lithium batteries.

Though it is the first time that Lopal Tech has ventured into lithium carbonate production, project partner Xinfeng Spodumene has technical reserves and production experience in lithium carbonate processing, the statement said.

Lithium carbonate prices continue to rise amid rapid growth in demand for power batteries, spurring companies to embark on more lithium carbonate processing projects.

After topping CNY500,000 (USD71,850) per ton in March, the average lithium carbonate price exceeded CNY495,000 this week. And the highest price on small orders in the spot market has hit CNY520,000, Shanghai Securities News reported today.

Editor: Peter Thomas