Ecopro Co., a South Korean battery materials leader, will set up a joint venture with the Chinese resources recycling company GEM Co. to produce cathode materials for lithium-ion batteries in Pohang, the southeast city's municipal government said Wednesday.

Representatives from the two companies, the Pohang municipality and the North Gyeongsang provincial government signed a memorandum of understanding the same day to build a plant for the production of the key material for lithium-ion batteries.

Under the agreement, Ecopro and GEM plan to build the joint venture plant on a site of 98,000 square meters at an industrial complex in the South Korean city.

The two companies will invest 150 billion won (about $135 million) in the project, with the plant expected to open by the end of 2017 and employ 310 workers.

Ecopro, based in Cheongju, central South Korea, is the No. 2 player in the global market for lithium-ion battery cathode materials. Based in Shenzhen, Guangzhou Province, GEM is China's first listed company in the fields of exploiting urban mines and resources recycling.

The two companies reached an agreement on the investment in anticipation of a rise in demand for medium- and large-sized lithium batteries and cathode materials caused by increased production of electric vehicles.  (Yonhap)