Rockwood Holdings is planning to invest $140m to construct a 20,000t lithium carbonate production facility at LeNegra, near the port of Antofagasta, northern Chile.
The new lithium carbonate plant is expected to come on stream by the end of 2013.
Rockwood is also currently completing a $75m expansion of its lithium production, including expansion of its brine pond system at Silver Peak, Nevada, US and construction of a battery grade lithium hydroxide plant and a global technical centre at Kings Mountain, North Carolina, US.
Both plants are expected to start their production this spring.
The new investment, along with the company's current $75 million expansion program, will increase total annual production capacity to 50,000t of lithium carbonate equivalent by the end of 2013.
Rockwood chairman and CEO Seifi Ghasemi said: "The accelerating increase in the demand for lithium, especially high purity lithium compounds required for the production of large format lithium ion batteries for electric vehicles of the future, is making it necessary for us to substantially increase production capacity to ensure that we meet the growing needs of our customers.
"We are committed to maintain our position as the leading supplier of lithium products to the world.
"The new investment will also make it possible for us to develop and produce new grades of sophisticated and high purity lithium compounds required for all applications such as batteries, pharmaceutical and lithium alloy."
Rockwood is involved in specialty chemicals and advanced materials businesses, with annual sales of approximately $3bn and 88 manufacturing facilities in more than two dozen countries.
The company mainly focuses on the specialty chemicals, pigments and additives and advanced materials markets.
