Wanhua joint venture! 240,000-ton lithium iron phosphate project launched in Hubei

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Recently, the Yichang Ecology and Environment Bureau issued the first public announcement regarding the environmental impact assessment for the project of Hubei Huaxing New Energy Co., Ltd., which involves the production of 240,000 tons of ferrophosphate per year along with related supporting facilities. The project is located in the Yidu Chemical Industrial Park in Hubei Province. New production workshops, vertical warehouses, and tank areas are planned to be built, along with auxiliary facilities such as fire water stations, rainwater collection tanks, and accident containment tanks. Once completed, the project will have an annual production capacity of 240,000 tons of iron phosphate. It is worth noting that the project developer, Hubei Huaxing New Energy Co., Ltd., is a joint venture between Wanhua Chemical and Xingfa Group. The company was officially established on March 6, 2026, with a registered capital of 600 million yuan. It is held 70% by Wanhua Chemical (Yantai) Battery Industry Co., Ltd., a subsidiary of Wanhua Chemical, and 30% by Xingfa Group. Lithium iron phosphate and the phosphorus chemicals industry are gradually moving toward integration. 01 The two giants team up again. Wanhua Chemical is a leading Chinese company in the field of new chemical materials, with operations covering the research, development, production, and sales of polyurethanes, petrochemical products, fine chemicals, and new materials. Xingfa Group is a large-scale enterprise in the field of fine phosphorus chemicals, with products mainly including phosphate series, pesticide series, silicone series, fertilizer series, and more. Two companies that seem unrelated actually have a point of intersection: lithium iron phosphate. The lithium battery industry is currently experiencing strong growth momentum; in the two main end markets, the penetration rate of new energy vehicles has exceeded 45%, while the installed capacity for energy storage has also increased by 60% on a year-on-year basis. Against this backdrop, the demand for lithium iron phosphate, a key cathode material for lithium batteries, continues to rise. Long-term supply agreements worth billions or even tens of billions are being signed in large numbers, and many leading material manufacturers as well as battery companies are increasing their investments in this area. Data shows that in 2025, domestic production of lithium iron phosphate reached 3.9202 million tons, a year-on-year increase of 58.8%, accounting for about 70% of the total output of cathode materials. At that time, the total value of the orders disclosed exceeded 240 billion yuan, with a secured supply volume of 6 million tons of products. As of this year, this trend continues. “All sales orders for the entire year of 2026 have been secured. ”Sichuan Fulin New Energy stated that the company’s orders are in high demand, with its production lines operating at full capacity. Hunan Yueneng, a leader in the industry, has also disclosed the estimated amount of transactions it will have with CATL in 2026; it is expected that the total value of routine transactions with CATL, its subsidiaries, and Jingxi Xiangtan Electrochemical in 2026 will not exceed 32.687 billion yuan. Faced with a continuously growing market, Wanhua Chemical and Xingfa Group are accelerating their efforts to develop the lithium iron phosphate industry chain. To date, Wanhua Chemical has planned production capacities of over 1.3 million tons per year for lithium iron phosphate in Shandong and Sichuan, of which 270,000 tons per year of such production capacity is already in operation. Xingfa Group’s operations are primarily focused on the upstream precursor stage of lithium iron phosphate; its current production capacity is 100,000 tons per year for lithium iron phosphate, 100,000 tons per year for lithium dihydrogen phosphate, and 80,000 tons per year for lithium iron phosphate. Among them, both iron phosphate and lithium dihydrogen phosphate are key precursors for lithium iron phosphate cathode materials. Iron phosphate usually needs to be mixed with a lithium source and a carbon source through wet grinding, followed by high-temperature sintering to produce the lithium iron phosphate cathode material, while lithium dihydrogen phosphate is primarily used in the processes for manufacturing lithium iron phosphate via the ferrous oxalate method, the iron phosphate method, or the iron oxide red method. In other words, the partnership between Wanhua Chemical and Xingfa Group is essentially a strong alliance between entities at various stages of the industrial chain. For Wanhua Chemical, this partnership will help it establish a stable supply chain for lithium iron phosphate raw materials, thereby addressing its shortcomings in terms of presence in the phosphorus resources sector. Based on a ratio of iron phosphate to lithium iron phosphate of 1:1.045, 240,000 tons of iron phosphate can roughly meet the production needs for 250,800 tons of lithium iron phosphate. For Xingfa Group, partnering with Wanhua Chemical is equivalent to establishing a significant downstream customer relationship. A stable and long-term supply partnership not only helps to stabilize capacity utilization but also further strengthens its position and market competitiveness in the lithium iron phosphate industry. To date, Wanhua Chemical and Xingfa Group have jointly established Yuanan Xinghua Mining Co., Ltd. and Yuanan Xinghua Phosphorus Chemical Co., Ltd., which focus on phosphorus resources; Hubei Xinghua Silicon Materials Co., Ltd. and Yantai Huaxing Silicon Materials Co., Ltd., which specialize in silicon materials; as well as Hubei Huaxing New Energy Co., Ltd., the company responsible for the iron phosphate project mentioned above. It is expected that in the future, the two parties will continue to advance their efforts in developing the battery industry chain, thereby achieving synergy both in terms of technology and industrial infrastructure. 02 The vertical layout is being further strengthened. At the beginning of this year, Hunan Yueneng’s private placement plan worth 4.788 billion yuan received approval from the China Securities Regulatory Commission; the funds are to be used primarily for expanding the production capacity of cathode materials for energy storage batteries as well as for replenishing working capital. As planned, 2.8 billion yuan of the raised funds will be invested in a project with an annual production capacity of 320,000 tons of lithium manganese iron phosphate; 500 million yuan will be used for a project with an annual production capacity of 75,000 tons of ultra-long-cycle lithium iron phosphate; 600 million yuan will be allocated to a project with an annual production capacity of 100,000 tons of lithium phosphate. The remaining 888 million yuan will be used to supplement working capital. It is worth noting that in earlier plans, the projects funded through fundraising also included a recycling project for used lithium iron phosphate batteries, aimed at producing 20,000 tons of lithium carbonate and 80,000 tons of lithium iron phosphate per year. Obviously, lithium iron phosphate manufacturers no longer focus solely on lithium iron phosphate cathodes; instead, they have begun to pursue a more comprehensive industrial development strategy. In the second half of 2025, the popularity of lithium iron phosphate surged once again. The rapid growth of the energy storage sector, along with the replacement effect of ternary batteries in the automotive industry, has raised the share of lithium iron phosphate batteries in global shipments to 60%, enabling them to take complete dominance in the lithium battery market. The share of lithium iron phosphate cathode materials in shipments has also risen, now reaching as high as 78%. This periodic situation of supply falling short of demand has greatly stimulated manufacturers’ enthusiasm for expanding production, leading to the busiest expansion cycle for lithium iron phosphate since 2022. According to incomplete statistics, since the beginning of last year, the total planned production capacity for lithium iron phosphate in China has exceeded 4.1 million tons per year; this capacity will generate a demand for approximately 4.28 million tons of lithium iron phosphate. However, due to factors such as inverted costs, the production of iron phosphate in 2025 was only 3.3351 million tons. Whether for the purpose of reducing costs or ensuring a stable supply of raw materials, extending the industrial chain upstream is the best option. Collaborating with phosphorus chemical enterprises and leveraging the existing, well-developed phosphorus resource industry chain to achieve an integrated layout has become a new trend. On the one hand, as market conditions change, the value of phosphorus resources is being reassessed, and phosphorus chemical companies have a strong desire to focus on developing high-value products in downstream markets. On the other hand, the phosphate chemicals industry is the natural upstream sector for lithium iron phosphate, and the two are highly interrelated. By partnering with enterprises in this industry, lithium iron phosphate manufacturers can ensure an independent supply of various raw materials such as phosphoric acid, lithium iron phosphate, and lithium dihydrogen phosphate, thereby reducing the costs and risks associated with project development. This type of cooperation is already common in the current industry. For example, Fulin Precision Engineering and Sichuan Furong Longmao plan to establish two joint ventures to jointly build a 100,000-ton/year high-pressure lithium iron phosphate production facility, a 100,000-ton/year lithium dihydrogen phosphate precursor production facility, and a 100,000-ton/year ferrous oxalate production facility in the Deyang–Aba Ecological Economic Industrial Park in Mianzhu City, Sichuan Province. Wanrun New Energy also has a partnership with Guizhou Phosphorus Chemical Group; the two parties jointly established Guizhou Phosphorus Chemical Wanrun New Energy Co., Ltd. prior to signing the contract, with a registered capital of 100 million yuan. This kind of “binding” may well become an important approach for businesses in the future to cope with rising demand and fluctuations in the supply chain.