Aluminum dry-coated and heat treated cathode material precursors. A particulate precursor compound for manufacturing an aluminum coated lithium transition metal (M)-oxide powder usable as an active positive electrode material in lithium-ion batteries includes a transition metal (M)-oxide core and a non-amorphous aluminum oxide coating layer covering the core. By providing a heat treatment process for mixed metal precursors that may be combined with an aluminum thy-coating process, novel aluminum containing precursors that may be used to form high quality nickel based cathode materials are obtained. The aluminum dry-coated and heat treated precursors include particles have, compared to prior art precursors, relatively low impurity levels of carbonate and/or sulfide, and can be produced at lower cost.