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Chinese supplier of high-precision chemicals is planning a $160 million investment to expand production capacity at its Indonesian facility, which manufactures materials for lithium batteries. The company believes that international demand and long-term supply agreements will sustain growth overseas outside of China.
This expansion will be managed through its project subsidiary, PT LBM Energi Baru Indonesia Batang, and will add 120,000 tons of advanced lithium iron phosphate (LFP) cathode materials used in power and energy storage batteries, according to an announcement made yesterday.
The new development will be located within the Batang Industrial Park in Central Java. Construction is scheduled to begin next month, with a completion timeline of 12 months, and an estimated return on investment of 24.4 percent.
Shares of the company increased by 0.9 percent today, closing at 23.38 Chinese yuan (roughly $3.45) each, in a market where the broader Shanghai index dropped 0.2 percent. Its stock listed in Hong Kong rose 3.3 percent, ending the day at HKD 12.55 (approximately $1.60), even as the Hang Seng Index declined 0.7 percent.
Last year, the initial phase of the Indonesian factory, with an annual output of 30,000 tons of LFP cathode materials, was completed and became operational. The second phase, which aims for 90,000 tons per year, is still in equipment commissioning and has not yet begun commercial production. Both phases are located within Kendal Industrial Park, about 75 kilometers east of Batang.
The company is expanding its Indonesian manufacturing capacity to meet rising demand. In February 2024, it signed a supply agreement with LG Energy Solution to deliver 160,000 tons of LFP cathode materials over five years, which was increased to 260,000 tons by the end of that year.
Additionally, in September, it announced that its Indonesian plant would supply its Chinese partner, a major player in the battery industry, with a total of 157,500 tons of materials from this month through 2031.
The project entities for the Indonesian factory are owned by a joint venture registered in Singapore, backed by a subsidiary of the company, an Indonesian sovereign fund, and an external investor. The company holds a 56 percent stake in the second and third phases, though its share in the third phase was reduced to 45 percent after LG Energy invested in that project as well.
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