CONTEMPORARY Amperex Technology Co. (CATL) , the world’s biggest electric vehicle (EV) battery maker, has agreed to take a stake in CMOC Group, a major cobalt producer, increasing vertical integration in China’s burgeoning EV supply chain.

Shanghai-listed CMOC’s second-biggest shareholder has agreed to an earlier proposal to transfer its 24.68% holding, valued at 26.75 billion yuan (US$3.7 billion), to a unit of Shenzhen-listed CATL. In return, the same shareholder will take a stake in the CATL subsidiary.

The deal was proposed at end- September, when CATL said it would “deepen industrial cooperation” between the firms.

CMOC mines metals in China and Africa, including at one of the world’s biggest copper-and-cobalt mines in Democratic Republic of Congo.

The deal is among many global examples of upstream and downstream firms in the EV sector forging closer ties as firms seek to lock in material supplies as demand expands rapidly.

CATL already jointly holds a stake of 25% in CMOC’s Kisanfu project in Democratic Republic of Congo.

The latest deal is between Sichuan CATL, a subsidiary of CATL, and Luoyang Guohong Investment Group, a State-owned firm that owns 24.68% of the cobalt producer through its Luoyang Mining Group.

After the transaction is completed, CMOC said Luoyang Guohong will have a 20.8% interest in Sichuan CATL, which in turn owns the stake in CMOC.

CATL said Oct. 21 that its third-quarter profit nearly tripled year on year, buoyed by rapid expansion in production to power the growth of EVs worldwide. (SD-Agencies)