China-based XTC New Energy Materials is planning to invest at least $1.55bn (CNY10bn) in a lithium battery materials project in Sichuan province.

The project involves construction of a facility capable of producing 100,000tpa of lithium iron phosphate and 60,000tpa of ternary materials, according to Reuters.

A related letter of intent has been signed by XTC New Energy with Yaan Economic and Technological Development Zone in Sichuan, south-west China, reported the news agency citing a filing.

Yaan is currently a lithium production base for China’s Sichuan Yahua Industrial Group, which is a supplier of battery-grade lithium hydroxide to US electric vehicle (EV) manufacturer Tesla.

XTC New Energy’s proposed project is planned to be developed in phases.

Phase I of the project will have a capacity of 20,000tpa for lithium iron phosphate and 20,000tpa for ternary materials.

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Estimated to cost $190m (CNY1.2bn), the lithium iron phosphate component is planned to be commissioned in 2023.

The ternary materials component, which is anticipated to cost $340m (CNY2.2bn), is scheduled for commissioning in 2024.

It will also include a 10,000tpa nickel and cobalt smelter for battery recycling.

Ternary materials used in the manufacturing of lithium-ion battery cathodes consist of nickel, cobalt and manganese.

XTC New Energy, a unit of metals and rare earths producer Xiamen Tungsten, is yet to submit a feasibility study to its board. It plans to fund the project from bank loans.

XTC New Energy has recently signed an agreement with CNGR Advanced Materials for the supply of cobalt tetroxide and ternary precursor materials.

According to the agreement, CNGR will supply between 20,000tpa and 25,000tpa of cobalt tetroxide from 14 September 2021 to 31 December 2023 to XTC New Energy.