(Yicai Global) Feb. 17 -- Shares in Mianyang Fulin Precision Machining surged as much as 6.5 percent today after battery giant Contemporary Amperex Technology injected CNY144 million (USD22.7 million) into the Chinese auto parts maker’s lithium-ion battery cathode materials unit to tighten control over output.

Fulin Precision’s share price [SHE:300432] closed up 2.57 percent today at CNY25.19 (USD4). Earlier in the day it had hit CNY26.18.

CATL’s shareholdings in Jiangxi Shenghua New Material will rise to 20 percent from 2.96 percent after the capital injection, the parent firm said yesterday. Fulin Precision’s stake will be diluted to 60 percent from 72.2 percent.

CATL previously invested CNY20 million (USD73.1 million) in March last year to help Shenghua New Material build a new plant costing CNY600 million with an output of 50,000 tons at a new electric vehicle battery raw materials production base in Shehong, southwestern Sichuan province.

Now the Yichun, eastern Jiangxi province-based company is preparing to build another plant at the base at a cost of CNY4 billion (USD631.6 million) with a yearly output of 250,000 tons to meet surging demand as new energy vehicle sales soar.

CATL’s investment will help relieve pressure on the firm’s finances and also help ensure the Ningde, southeastern Fujian province-based firm’s supply of raw materials. The deal will build long-term cooperation with CATL and consolidate Shenghua New Material’s position in the lithium-ion battery cathode material sector, Fulin Precision said.

Shenghua New Material runs three factories and has an annual production capacity of 65,000 tons of lithium iron phosphate and 3,000 tons of ternary cathode materials.

Editor: Kim Taylor