UPDATE 1-Energy group Total's Saft arm strikes China batteries deal

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PARIS, April 4 (Reuters) - The Saft subsidiary of French energy group Total has struck a new deal to expand its presence in China in the fast growing market for batteries, energy storage and electric vehicles.

Total said on Thursday that Saft had signed an agreement with Tianneng Energy Technology to create a joint venture to expand their lithium-ion activity.

The companies did not disclose the value of the deal.

Manufacturing will be based at the Changxing Gigafactory, with a potential capacity of 5.5 gigawatt hours (GWh), part of which is already in operation.

Total’s Saft arm will have a 40 percent shareholding in the new venture, while Tianneng will hold the remaining shares.

The companies said they plan to expand the Changxing facility and ramp up its production capacity to meet future growing demand, mainly driven by e-mobility sales and the development of renewable electricity generation capacity.

The deal gives Saft and Total an entrance into the Chinese battery market as European manufacturers race to catch up with Asian rivals in the fast growing market.

Saft, a 100-year old French company that specializes in industrial batteries, is leading a European consortium that includes Siemens, Solvay, Manz, Umicore and Eramet, which hopes to build a European battery giant.

“The joint venture will allow Saft to join forces with a Chinese partner, a world leading lead acid battery manufacturer, willing to develop its lithium-ion activities,” Total’s Chief Executive Officer (CEO) Patrick Pouyanne, said in a statement.

“It will also give Saft access to China’s booming battery market as well as highly competitive mass production capacity to accelerate its growth,” he added.

Saft’s CEO Ghislain Lescuyer, said the deal will allow the company to make a change in scale and significantly increase its footprint in the Chinese Li-ion battery market that will represent over 40 percent of the global demand by 2025. (Reporting by Sudip Kar-Gupta and Bate Felix Editing by Inti Landauro/Keith Weir)