(Yicai Global) Dec. 30 -- Shares in detonation equipment seller Sichuan Yahua Industrial Group hit the exchange-imposed daily limit today on the news that its Ya’an unit in southwestern Sichuan province will sell battery-grade lithium hydroxide, which is used in the production of battery cells for new energy vehicles, to US electric car giant Tesla.

Yahua Industrial [SHE:002497] soared 10 percent to trade at CNY19.95 (USD3.05) this afternoon.

The five-year contract is worth between USD630 million and USD880 million, Chengdu-based Yahua Industrial said yesterday. No prices or purchase volumes were given.

The deal is an endorsement of the quality of Yahua Lithium’s products and an important milestone for the firm, it added. It will guarantee the growth of the explosive maker’s lithium business.

Yahua Lithium runs a lithium ore mine in Sichuan province that has an annual output of 40,000 tons of refined lithium compounds, including lithium hydroxides and lithium carbonates. The unit is also a long-term supplier to Australia’s Core Exploration, which develops lithium and diversified metals projects, and in which Yahua Lithium also owns a stake.

California-based Tesla has been ramping up production at its Shanghai Gigafactory, aiming for an annual output of 150,000 units. Phase two of the plant is expected to start operating soon.

Editor: Kim Taylor