HONG KONG (Yonhap News) ― SK Group, South Korea’s third-largest conglomerate, has broken ground for a plant in China’s southwestern city of Chongqing to produce cathode materials for lithium-ion batteries used in consumer electronics products and electric vehicles, in a bid to tap into the rapidly growing demand in China, officials said Thursday.

SK China, the Chinese subsidiary of SK Group, started constructing the plant this week in the Chinese city’s Two Rivers New Zone, which was designated in 2010 as the development base for the manufacturing and service industries in inland China, said the Chongqing municipal government.

The new plant, to be built with an initial capital of $100 million, will have an annual capacity of 9,600 tons of cathode materials, which can be used in producing 42 million lithium-ion batteries for laptop computers or 3.2 million lithium-ion batteries for electric vehicles.

Cathode is one of the three participants in the electrochemical reactions taking place in a lithium-ion battery. Cathode materials, along with anode materials, enable lithium ions to move when the battery is charged or discharged.

The annual output in the Chongqing plant is estimated to reach 670 million yuan ($106 million) in value terms.

The municipal government of Chongqing expected SK China’s new facility will accelerate the development of the district as a production base for portable computers and new energy vehicles.

It estimated that the Two Rivers New Zone will see the total annual output capacity of electric vehicles surpass 1.5 million units by 2020, with a battery market size of more than 100 billion yuan.

The city of Chongqing is also aiming at building the world’s largest laptop computer production base with an annual output exceeding 100 million units, of which the battery market size is to be more than 80 billion yuan.

In September last year, South Korea and China agreed to work together to develop China’s western inland market, launching a South Korea-China industrial park in the Two Rivers New Zone.

The construction of the industrial park was to speed up the pace of South Korean enterprises settling in the area.

Currently, about 60 South Korean companies have invested in Chongqing, including some 30 companies, such as POSCO, LG Group, Lotte Group and Hankook Tire Corp., in the Two Rivers New Zone.