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China: Lithium battery makers boosting production

Companies are building more factories to meet climbing demand from the mobile phone, computer and automotive sectors.

Upbeat developments in the mobile phone, computer and automotive application markets are encouraging suppliers of lithium batteries in China to raise their investment further in the line. Makers are taking advantage of the “green” trend and the chemistry’s declining prices to boost presence in these sectors.

HongKong New Energy invested initially $320 million to build a factory in Ningde, Fujian province. The overall project cost is expected to touch $1 billion. Once operational, the facility will have an annual capacity of 5 billion units or $3.1 billion, positioning Fujian as the world’s largest base for lithium batteries.

Ningxia Yinxing Energy, meanwhile, signed an agreement with a company in Zhuhai, Guangdong province, to establish the first lithium battery enterprise in the Ningxia Hui Autonomous Region. The former is spending $5 million on the undertaking.

The Shandong Dawang Jintai Group has allocated $97.3 million for a similar plant. Shenzhen Zhongtao Battery Co. Ltd has built a facility for aluminum shell Li-ion and Li-polymer battery manufacture, with respective daily output of 120,000 and 50,000 units. For packs, the yield is 80,000 units.

Further buoying makers’ production efforts is the government’s 12th Five-Year Plan, which has identified new-energy vehicles as among the strategic industries to be promoted. This will entail the implementation of a policy in 2016 or 2018 mandating the use of electric vehicles in the country’s major cities to reduce air pollution.

Lithium battery companies see this as a huge opportunity for the sector. They are looking at an estimated 500,000 electric cars in China by 2015. The number translates to 12.5 million kilowatts of Li-ion batteries, or the equivalent of 500 million units for the iPad.

The chemistry, however, has yet to be widely used in EVs due to capacity and cruising range issues. Makers estimate it will take five to eight years for the technology to reach maturity.

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