(Yicai Global) Sept. 4 -- Contemporary Amperex Technology, China's largest maker of electric vehicle batteries, will pay AUD55 million (USD37.3 million) for an 8.5 percent stake in struggling Australian lithium miner Pilbara Minerals to bolster its upstream position in the supply chain.

The purchase will be made through the firm's Hong Kong unit for AUD0.30 (USD0.20) a share, the Ningde, Fujian province-based company said today. CATL will also have the option to increase its stake to 14.9 percent over the next 18 months.

Low prices for lithium, an important basic material used in rechargeable batteries, and tough competition have battered sales at Perth-based Pilbara, which specializes in exploring and developing lithium and tantalum mines. The firm reported a net loss of AUD28.9 million in the fiscal year ending June 30, more than in the previous year. It is looking to raise up to AUD112 million through equity placements.

In addition to the shares issued to CATL, Pilbara will release AUD36.5 million in new shares to underwriters and up to AUD20 million worth to existing shareholders, it said in a statement today. At the moment, the firm has many shareholders with the largest one holding an 8.24 percent stake.

Once the transaction is complete, CATL will negotiate the procurement of spodumene concentrate with Pilbara. They will also discuss business operations and technical support, CATL added.

Pilbara's stock [ASX:PLS] was suspended from trading on Sept. 2 as the company prepared for the placement. Before the suspension, the price was AUD0.35 a share, more than what CATL paid. The share price has halved since January last year.

CATL's stock price [SHE:300750] was little changed today at CNY71.18 (USD9.96).