Chinese state-owned Sichuan New Energy Power has inked a preliminary lithium chemical cooperation agreement with compatriot Huayou Cobalt, Kallanish reports.

The company, formerly known as Sichuan Chemical Company, announced in a security filing on 18 December that the parties intend to partner on lithium chemicals production. The deal would include the purchase of assets both at home and abroad, as well as the joint construction of battery recycling capacity in Sichuan province. The latter could potentially cover the needs of the entire southwestern China region, according to the statement.

The agreement runs from December 2021 until November 2024, with the parties expected to sign a final cooperation agreement before it expires. Details on potential locations and capacities are yet to be disclosed.

Sichuan New Energy noted that its lithium battery business development will have a positive impact “in line with the company’s long-term development strategy.” The company is said to own a 62.75% stake in the Lijiagou lithium mine in Sichuan province, where production is slated to start next year. The mine is planned to produce 1.05 million tonnes of lithium ore annually.

Huayou is engaged in the research, development and manufacturing of new energy lithium battery materials, on top of its cobalt products. It operates three businesses – one focused on ternary precursor products for cathode materials; one for deep processing of cobalt and nickel materials; and one handling mining, selection and primary processing of non-ferrous metals such as cobalt, nickel and copper.