(Yicai) Jan. 10 -- Shares in Zhejiang Yongtai Technology surged by the exchange-imposed limit today after the Chinese electrolyte chemicals supplier said that battery giant Contemporary Amperex Technology has promised to purchase no less than 100,000 tons of electrolytes from the firm every year over the next two years.

Yongtai's share price [SHE:002326] closed up 10 percent at CNY11.50 (USD1.60).

The transaction price will be determined according to the actual market price and the supply volume will depend on CATL’s needs, the Taizhou-based company said, citing the deal signed by the two parties on Jan. 9. The financial value of the contract was not mentioned.

It replaces an agreement penned by the two parties in July 2021 in which Yongtai agreed to supply CATL with three electrolyte chemicals until the end of 2026. Ningde-based CATL paid CNY600 million (USD83.7 million) in deposits for this deal.

It was Yongtai’s first long-term supply contract with CATL and included a cumulative purchase volume of at least 24,150 tonnes of lithium hexafluorophosphate, the main electrolyte chemical. Lithium hexafluorophosphate accounts for between 43 percent and 50 percent of the cost of electrolytes in an electric car battery and around 13 percent of the total mass.

In the new contract, Yongtai is supplying electrolytes rather than electrolyte chemicals and the annual purchase volume appears to have increased significantly.

The deal will help give full play to Yongtai’s business synergy along all links in the electrolyte materials industrial chain and enhance the firm’s competitive advantages, it said.

Editor: Kim Taylor