XTC New Energy plans $1.6 billion investment in battery equipment

XTC New Energy Materials, a unit of Chinese rare earth and metals producer Xiamen Tungsten, on Thursday reported a $1.55 billion investment plan in a lithium battery materials project in Sichuan province.

Demand for batteries is booming in the global automotive market in China, where sales of new energy vehicles jumped 182% year-on-year in August, prompting a flurry of investment in new capacity to produce battery ingredients.

XTC New Energy has signed a letter of intent with Yaan Economic and Technological Development Zone in Sichuan, southwest China, to build a plant that will eventually produce 100,000 tonnes of lithium iron phosphate and 60,000 tonnes of ternary materials each year.

Ternary refers to the combination of three metals used in the cathodes of lithium-ion batteries, such as nickel, cobalt and manganese. Yaan is already a lithium production base for Tesla supplier Yahua, while Tianqi Lithium is also based in Sichuan.

The first 1.2 billion yuan phase of the lithium iron phosphate component will have an annual output of 20,000 tonnes. It is expected to be commissioned in 2023.

The first phase of the ternary materials component is scheduled to come online in 2024 and will also produce 20,000 tonnes per year. It will involve an investment of 2.2 billion yuan and include a 10,000-tonne-per-year nickel and cobalt smelter for battery recycling.

The timing of the subsequent investment will be based on market conditions and that a feasibility study has yet to be presented to its board of directors and bank loans would be taken out to finance the project.