(Yicai) Feb. 22 -- Lopal's shares advanced after the Chinese battery materials supplier said it received a CNY7 billion (USD1 billion) order from South Korean power battery giant LG Energy Solution.

Lopal [SHA: 603906] was trading up 4.4 percent at CNY9.20 (USD1.28) as of 10.55 a.m. today, after opening 8.7 percent up. The Shanghai Composite Index rose 0.6 percent.

Lopal's unit Changzhou Liyuan New Energy Technology will supply 160,000 tons of lithium-iron phosphate cathode materials to LG Energy from this year to 2028, the Nanjing-based company announced yesterday, citing a deal the pair recently signed.

Liyuan New Energy and LG Energy will negotiate the prices on a monthly basis, Lopal noted, adding that the order is expected to be worth over CNY7 billion based on current market prices.

The pair is also negotiating to increase the order amount by 360,000 tons, which would be supplied between next year and 2028, Lopal pointed out. This part of the deal is expected to be finalized by the end of June.

Liyuan New Energy and LG Energy had already held talks last September, when the two companies discussed the possibility of establishing a joint venture in Indonesia to produce lithium-iron phosphate cathode materials or the feasibility of LG Energy taking an equity in Lopal's plant under construction in the Southeast Asian country. But no further details have been disclosed about the progress of this cooperation so far.

Lopal, which is among the world's three largest phosphate based refined cathode material suppliers by sales volume, kicked off the construction of the first phase of its plant in Indonesia with an annual production capacity of 30,000 tons of lithium-iron phosphate cathode materials last July.

Once completed, the Indonesian plant will have a total investment of USD290 million and a production capacity of 120,000 tons of lithium-iron phosphate cathode materials. Lopal plans to use the proceeds from a secondary listing on the Hong Kong Stock Exchange, for which it applied last October, to fund the plant's second phase.

Compared to ternary lithium-ion batteries, which are mainly used by international electric vehicle makers, batteries using cathode material made of lithium-iron phosphate are cheaper to produce, safer, and more environmentally friendly.

Editor: Futura Costaglione