(Yicai Global) Nov. 10 -- Shares in Nations Technologies surged as much as 9.85 percent today after the Chinese chipmaker said it was selling a 15 percent stake in its electric car battery materials factory to South Korean firm Posco Chemical for CNY141 million (USD22 million).

Nations Tech's share price [SHE:300077] closed up 6.51 percent at CNY24.86 (USD3.89). Earlier in the day it had reached CNY25.64.

The investment will go directly to unit Neimenggu Sinuo New Material Technology which runs an battery anode material processing plant in Hohhot, Inner Mongolia Autonomous Region, Nations Tech said today. The subsidiary has, however, been running at a loss in recent years.

Posco Chemical, which is owned by South Korea’s biggest steel mill Pohang Iron and Steel, will be given exclusive rights to sell the plant’s products in South Korea over the next three years. If it can shift over 5,000 tons of products a year over this period, the deal will automatically renew for two years.

Nations Tech has also committed to take Sinuo public. If this does not happen within the three year period, Pohang-based Posco Chemical has the right to ask Nations Tech to repurchase its 15 percent stake at the same price it paid for it.

The transaction will reduce Shenzhen-based Nations’ Tech’s stake to 80.75 percent from 95 percent and that of Zhejiang Huayou Cobalt, a ternary lithium-ion battery materials giant, to 4.25 percent from 5 percent.

Editor: Kim Taylor