(Yicai Global) March 17 -- Contemporary Amperex Technology, the world’s biggest vehicle battery maker, and partners will invest CNY500 million (USD76.9 million) in a major Chinese supplier of lithium iron phosphate materials to build a new production line with annual output of 50,000 tons.

Auto parts maker Mianyang Fulin Precision said in a statement yesterday that it will join the investors to inject capital into Jiangxi province-based Shenghua New Materials. Since it went into operation in 2016, Shenghua New Materials has supplied a number of battery makers with products, public information shows.

The new lithium iron phosphate production line will prioritize supply to CATL or its designated entities. The statement made no mention of the factory’s current annual capacity nor did it provide details on the expansion plans.

Sichuan province-based Fulin Precision will invest CNY272 million in Shenghua New Materials, CATL and its concerted parties CNY64 million, while Changjiang Chendao Hubei New Energy Industry Investment Partnership will put in CNY164 million.

Shares of Fulin Precision [SHE: 300432] closed 5.9 percent higher today at CNY9.29 (USD1.40) each, while the Shenzhen Component Index added 1.2 percent.

After the investment, Fulin Precision’s stake in Shenghua New Materials will drop to 68.33 percent. Ningde, Fujian province-based CATL and its parties will hold 8.89 percent and Changjiang Chendao 22.78 percent, the statement said.

In addition, CATL has the right to choose to further invest in the target company at any time within 18 months from the date when the deal is settled.

Editor: Peter Thomas