In the first half of this year, the output value of Yichang's new energy and new materials industry approached 40 billion yuan, marking a 57.6% year-on-year increase. Situated at the exit of the Three Gorges on the Yangtze River, Yichang possesses over 4 billion tons of phosphate rock reserves, accounting for 15% of the national total. Leveraging its Yangtze riverbank remediation efforts and a robust phosphate chemical industrial foundation, this traditional resource-based city, once plagued by the "chemicals encircling the river" dilemma, has undergone a decade of painful "closure, renovation, relocation, and transformation." It has pivoted from merely selling raw ore to manufacturing batteries, with a complete "mine-materials-cell-storage-recycling" new energy industry chain now taking shape along the river.

During a recent on-site investigation in Yichang, Hubei Province, it became clear that by capitalizing on its existing chemical expertise, circular industrial systems, and phosphate resource advantages, the city has rapidly attracted leading lithium battery companies such as Envision Power, Chuineng New Energy, and Brunp Recycling. Combined with the deep transformation of local chemical giants like Xingfa Group and Hubei Yihua into high-end new materials and battery materials, a fully integrated industrial loop covering "phosphate rock - phosphoric acid - silicon-fluorine materials - new energy materials - new energy batteries - powertrain systems - terminal applications - recycling" is taking shape. This year alone, the city's new energy and new materials sector generated nearly 40 billion yuan in output, a 57.6% surge year-on-year, signaling the emergence of a hundred-billion-yuan industrial cluster.

However, this rapid expansion is accompanied by significant challenges, including gaps in the supply chain supporting infrastructure, a shortage of skilled talent, bottlenecks in the localization of industrial control systems, and intense homogenized competition within the industry. As Yichang sets its sights on becoming the "Global Capital of Energy Storage," its path forward is fraught with hurdles that must be overcome.

Navigating the Transition from Legacy Chemicals

Historically, the dense cluster of phosphate chemical plants along the river formed the bedrock of Yichang's industrial output. At its zenith, over 130 chemical enterprises were scattered across more than 200 kilometers of the Yangtze's Yichang shoreline, with the nearest located less than 100 meters from the river. This created the "chemicals encircling the river" dilemma, leading to excessive total phosphorus levels in the water and severe air pollution. To address this, Yichang made a decisive move in 2017, launching a comprehensive "closure, renovation, relocation, and transformation" initiative for riverside chemical companies.

Bai Boying, the board secretary of Xingfa Group, told reporters that the Xiaoting Industrial Park is both the company's industrial foundation and a core demonstration zone for Yangtze River protection. The group has resolutely advanced the elimination of production capacity along the river, even at the expense of short-term assets and profits. In total, they dismantled 32 outdated, high-risk, and high-energy-consuming production units along the shoreline, with a combined asset value of 1.358 billion yuan. This made them the first riverside enterprise to completely clear outdated capacity within one kilometer of the river, fundamentally removing ecological risks. This transition was not a simple demolition, however. The city did not abandon its decades of accumulated phosphate chemical expertise, park infrastructure, or chemical talent. Instead, it transferred this entire foundation to the new energy sector.

A prime example of this local transformation is Xingfa Group's "Xingfa Magic Ring" circular model. Within its Yichang New Materials Industrial Park, enterprises operate as both upstream and downstream partners, supplying raw materials to each other. This creates a system of mutual supply, full consumption of by-products, and efficient resource use, striving for "complete utilization and near-zero emissions." Bai Boying noted that this self-sustaining circular system effectively reduces four core costs: raw material procurement, long-distance transportation, waste disposal, and energy consumption, granting high-end new materials products a natural cost advantage. On the competitive front, this highly self-sufficient supply chain effectively mitigates risks from external raw material price fluctuations and supply shortages. Furthermore, green production aligns with national dual-carbon goals and meets the green procurement standards of downstream high-end clients.

Building on this chemical base, Xingfa Group has achieved a capability leap and industrial restructuring, moving from traditional phosphate chemicals to high-end green new materials. They have developed 723 products across 9 categories and 30 series, including food-grade, pharmaceutical-grade, and electronic-grade items. Notably, their production capacity for wet electronic chemicals stands at 470,000 tons per year, ranking first nationally. Their comprehensive strength in organosilicon places them in the domestic first tier, and they are a top domestic producer and second globally for organophosphorus herbicides. They have also commissioned production lines for 100,000 tons per year of iron phosphate, 80,000 tons per year of lithium iron phosphate, and 100,000 tons per year of lithium dihydrogen phosphate, while investing in forward-looking areas like sodium-ion battery materials, solid-state battery key materials, lithium anode materials, and power battery recycling.

The Three Gorges Laboratory, initiated by Xingfa Group, has achieved technological breakthroughs and domestic substitution in areas like kilogram-scale black phosphorus production and photoinitiators for photoresists. This has led to three flagship products: raw black phosphorus crystals, ultra-fast charging black phosphorus anode materials, and black phosphorus modified catalysts, along with a range of high-end products like phosphorus-based flame retardants and phosphorus-containing pharmaceutical intermediates. These innovations are propelling Xingfa Group to the apex of the global phosphate chemical industry chain and value chain.

Another local chemical giant, Hubei Yihua, has partnered with Brunp Recycling to produce iron phosphate and nickel sulfate locally, supplying battery materials using chemical by-products. Currently, the first phase of its 200,000 tons per year iron phosphate project is running at near full capacity, and a 500,000 tons per year advanced battery materials project, with a total investment of 6.1 billion yuan, is slated for production in the second half of 2027. In Yichang, phosphate rock is no longer just a fertilizer raw material; the proportion of fine chemicals has jumped from 18.6% in 2018 to 48.2%, significantly enhancing the added value of resources and laying the groundwork for supplying external battery factories at close range.

Forming a Closed-Loop Industrial Chain with Leading Players

With the rise of local materials production capacity, new energy leaders like Chuineng, Envision Power, and Brunp Recycling have flocked to Yichang. This has created a layout where materials, cell manufacturing, and recycling are in close proximity, further compressing logistics and supply chain costs. The Envision Power Yichang base officially commenced production in July, focusing on 790Ah large-capacity square-shell energy storage cells, with its first batch of products directly shipped to Germany. The first phase brings 40GWh of energy storage cell capacity online, with a second phase of 60GWh cells and 60GWh energy storage systems under construction. Once fully completed, it will become the world's first 100GWh-level full-chain energy storage production base.

Zhao Xiuhang, the head of the Envision Power Yichang base, explained that with locally supplied iron phosphate, lithium iron phosphate, and other primary materials, combined with Yangtze River shipping for exports from Yichang Port, logistics costs are reduced by over 30% compared to road transport. The base also plans to leverage the area's high proportion of clean energy to build a zero-carbon park, catering to the green procurement needs of overseas clients. Meanwhile, Chuineng New Energy's super factory in Yichang has its first phase running at full capacity, and its second phase commenced production two months ahead of schedule, focusing on 588Ah large-capacity energy storage cells and fast-charging power batteries. In the first half of this year, Chuineng Yichang generated 7.5 billion yuan in output, with shipments growing 222% year-on-year. Energy storage products account for over 90% of its output, with orders covering multiple countries in the Middle East and Europe.

Jiao Linsen, deputy general manager of Chuineng Yichang, stated that once the second phase reaches full capacity within the year, annual output value will exceed 22 billion yuan, and total capacity will jump to 150GWh, potentially placing it in the global first tier of single-site lithium battery manufacturing bases. With this rapid capacity expansion, Chuineng's local supporting rate has also increased significantly. A large portion of its primary raw materials now comes from Yichang and its surrounding areas, with core supporting suppliers like BTR, Senior Technology, and Huayou Cobalt having established operations in the city. Raw material supply efficiency has improved dramatically, with the fastest lead time from order to factory arrival being just 28 hours, a significant logistics advantage compared to the average 72 hours at CATL's Fujian base.

The crucial link in the industrial chain closure is held by Brunp Recycling. The Yichang Brunp Integrated Battery Materials Industrial Park has streamlined the "phosphate rock - precursor - cathode - battery - recycling and regeneration" process. Regenerated iron phosphate and lithium carbonate from dismantled spent batteries are supplied directly to the adjacent cathode production line, eliminating the need for long-distance transport and packaging. The fastest cycle time from a spent battery to a new cathode material is just one week. Currently, one in every five spent power batteries in China is regenerated at Brunp Yichang. Once fully operational, it will have the capacity to process 500,000 tons of spent batteries annually, with the regenerated materials able to continuously supply the local battery industry chain, reducing dependence on externally purchased mineral raw materials.

A representative from the Yichang Municipal Bureau of Economy and Information Technology highlighted that the city now has 67 industrial enterprises above a designated scale in the new energy and new materials sector. In 2025, the total industrial output value reached 72.3 billion yuan, with 39.5 billion yuan generated in the first half of 2026, a 57.6% increase year-on-year. Current production capacity includes 760,000 tons per year of iron phosphate (with 810,000 tons under construction), 530,000 tons per year of lithium iron phosphate (with 150,000 tons under construction), and 150,000 tons per year of battery recycling capacity (with 350,000 tons under construction). The planned production capacity for new energy batteries exceeds 300GWh, with 197GWh already built. The "wall-to-wall supply" model among upstream and downstream enterprises is converting resource advantages into tangible manufacturing scale.

Through park-based layouts, long-term supply agreements, cross-shareholdings, and technology sharing, enterprises in areas like the Yichang High-tech Zone and Zhijiang Yaojiagang Chemical Park are achieving "upstream and downstream just next door," significantly reducing logistics costs and supply risks. The city is also promoting large-scale circulation between parks, connecting basic chemical raw materials to new materials, forming full industrial chains from "a piece of phosphate rock to a kilowatt-hour of electricity, a lump of coal to a bolt of cloth, a grain of salt to a medicine, and a grain of sand to a tube of adhesive." This synergistic and circular development of the "phosphorus, fluorine, silicon, coal, and salt" five chains is pushing the industry towards the higher end of the value chain.

Addressing the Real-World Challenges of a Growing Cluster

Despite the rapid expansion in scale, the new energy and new materials industry chain in Yichang is not without its gaps. Adopting a strategy of "attracting what's missing and strengthening what's weak," the city is taking multi-pronged measures to shore up its weak links. The official from the Yichang Municipal Bureau of Economy and Information Technology explained that in the electrolyte and solvent segment, the focus is on attracting leading electrolyte blending companies like Tinci Materials and Capchem, leveraging the carbonate solvent resources produced as by-products by Yihua Group to build a complete "lithium salt - solvent - additive - electrolyte blending" chain. Simultaneously, leveraging its phosphorus, silicon, and fluorine chemical foundation, the city plans to develop high-performance wet-process and coated separator industrial parks in Yidu and Zhijiang, aiming to attract companies like Senior Technology to fill the gap in separator production. In terms of lithium battery equipment, the plan is to use equipment financial leasing and industrial fund guidance to attract equipment makers like Kedali to establish service bases and key component manufacturing centers in Yichang. This will gradually cultivate local precision machining and equipment maintenance capabilities, with the ultimate goal of local maintenance and independent substitution for some core equipment.

Several companies interviewed universally identified talent shortages as an increasingly prominent issue. Envision Power's first phase employs 1,500 people, with that number expected to grow to 3,000 once both phases are fully operational. Chuineng's second phase will bring its total workforce to over 10,000. Once these two major bases are at full capacity, they will need not only a large number of skilled technicians but also high-caliber talent in advanced R&D and process engineering. Although companies are cooperating with local vocational colleges on tailored training programs, and human resources departments are actively expanding supply through special recruitment drives, student experience programs, and off-site campus recruiting, the long training cycle for technicians means the talent supply is struggling to keep pace with capacity expansion.

Xingfa Group also mentioned that cross-field technology and talent barriers are particularly significant. The technological systems required for traditional bulk phosphate chemicals differ vastly from those for semiconductor-grade electronic chemicals and new energy materials. Building a reserve of high-end R&D talent requires long-term, sustained effort and accumulation to achieve technological upgrades across generations.

The localization of bottom-layer control systems in production lines presents another practical challenge. Kyland Technology is piloting an "Industrial Internet + hazardous chemical safety" system in Yichang and is also attempting to apply its domestically produced industrial operating system to lithium battery production lines. A representative from Kyland Technology (Yichang) Co., Ltd. explained that lithium battery production lines, which undergo rapid iteration, demand near-zero tolerance for instability or latency in industrial control systems. While their domestic industrial OS and controllers are not inferior on individual metrics—such as the Hongdao Industrial OS with 5-microsecond real-time jitter, full-stack autonomous control, and certification for the highest level of four functional safety standards, validated in demanding scenarios like chemicals, transportation, and power grids—three real-world obstacles stand between domestic solutions and lithium battery factories. First, the switching costs and validation cycles are high; a single day of downtime on a production line can mean losses in the tens of millions, so lithium battery lines are reluctant to switch, and new domestic systems are hard to establish quickly. Second, process know-how is deeply coupled with the control system, and domestic vendors often "can handle the control but can't tune the process," making it difficult to truly replace original equipment manufacturer-bound solutions. Third, equipment manufacturers, integrators, and maintenance engineers are accustomed to the development toolchains and ecosystems of imported PLCs, so the configuration environment, ecosystem maturity, and talent pool for domestic solutions still need time to develop.

Yichang's transformation serves as a typical example for resource-based cities: it possesses upstream mineral resources, has a chemical foundation, attracted leading manufacturing companies, and is building a complete industrial chain. However, resources do not automatically equal competitiveness, and production capacity scale does not mean technological influence. Going forward, Yichang must work to release the capacity of its existing leaders, fill the gaps in supporting infrastructure, promote industry-education integration, and lay out next-generation frontier technologies simultaneously. How to truly convert its phosphate rock advantage into cost, technology, and brand advantages—and retain the added value of "Made in Yichang" locally—remains a pressing real-world challenge for this industrial city on the banks of the Yangtze that it must continually address.