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People walk near a CATL building in Ningde, China, on Dec. 16, 2016.

Jake Spring/Reuters

China’s CATL will buy more than 10 million shares of Neo Lithium Corp to become the company’s third-largest shareholder, the latest in a string of investments by Chinese companies into South American lithium projects.

The deal, announced on Monday, comes as demand for the electric vehicle battery metal is expected to triple over the next five years as automakers shift their focus away from internal combustion engines to EVs.

Contemporary Amperex Technology Co Ltd (CATL), which supplies lithium iron phosphate batteries to Tesla Inc, will pay $8.5 million for its stake in Toronto-based Neo Lithium, the companies said on Monday.

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CATL will also gain one seat on Neo Lithium’s board and sit on the company’s technical committee, where it will help Neo draft a feasibility study for its Tres Quebradas Lithium project in Argentina’s northern Catamarca province.

That study will help Neo Lithium attract more investors and firm its timeline for opening the project, which the company hopes will initially produce 20,000 tonnes of lithium.

The deal is expected to close later this year after Chinese government approval. BlackRock Inc will remain Neo Lithium’s largest shareholder.

Shares of Neo Lithium jumped 30 percent to $0.75 in midday trading.

Neo Lithium says it will retain full control over the project’s lithium, though China is the world’s largest consumer of the white metal and the world’s largest EV market. Chinese companies in recent years have invested in lithium projects across Chile and Argentina.

The deal with CATL was at a 45 percent premium to Neo Lithium’s Friday closing stock price. To abrogate CATL’s concerns about the premium, several Neo Lithium executives agreed to buy roughly 483,000 shares at the same price.

“We justified the valuation with our own pockets,” Waldo Perez, Neo Lithium’s chief executive, told Reuters.

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