China’s battery manufacturing giant CATL announced Tuesday plans to invest up to CNY 32 billion ($4.96 billion) in a battery recycling facility in Hubei, Kallanish reports.

Construction of the so-called Bangpu Integrated Battery Material Industrial Park was unanimously approved by the company’s board. Works are set to start in 2022 and conclude in 2027.

The project is “conducive to further improving the company’s strategic layout in the lithium battery industry,” CATL says in a stock exchange filing. It added the investment offers potential for capacity extension of power batteries, improvements in the supply chain of new energy materials and promote new energy.

The facility will recycle waste battery materials, lithium iron phosphate (LFP) and ternary precursors, as well as other components such as cobalt and graphite. The project will be developed through a joint venture with Hubei Yihua Chemical Industry.

CATL also recognised potential risks to the project, including local support policy, delays in construction, the supply/demand of electrode materials, and market competition.

Yet, it was emphatic to say the project will guarantee the company’s battery material supply and promote full life cycle management of decommissioned batteries. These will ultimately have “great significance” for controlling costs and enhancing product competitiveness, says CATL.

“The company’s capital expenditure and cash expenditure will rise, but in the long run it has a positive impact on the company’s business layout and operating performance. It is in the interests of all shareholders of the company,” it concludes.