An explosion at a battery recycling company under CATL, China's largest automotive lithium-ion battery maker, has slightly dampened Chinese investors' enthusiasm for the new energy sector.

At around 18:12 on January 7, 2021, an explosion occurred in a workshop at CATL's subsidiary, Hunan Brunp Recycling Technology Co., Ltd. according to a statement from the Ningxiang Municipal Government on Thursday.

The accident has resulted in one death, six serious injuries, and 14 minor injuries. The plant has now been shut down to cooperate with the accident investigation.

Brunp, whose main product is ternary precursors, is currently the largest national high-tech enterprise in China for the recycling and treatment of used lithium batteries and the production of high-end battery materials.

The plant is located in the Ningxiang High-tech Zone in Changsha, Hunan Province, with an investment of RMB 200 million.

CATL said that it has asked its companies, including Brunp, to conduct a danger inspection and initially assessed that the accident has limited impact on its production and operation business.

CATL also apologized for the social impact of the accident as well as the injured and their families.

On Friday, CATL fell 2.11% to 404.5 yuan by the close of trading. The company has risen more than 60% in the past month.

Huatai Securities believes the plant may need to take some time off for renovation, though the impact is expected to be relatively limited as it is an old plant and thus has little capacity.