European automotive giant Volkswagen Group (VLKAF) is investing $69 million to take a 10% stake in Canadian lithium miner Patriot Battery Metals (PMET).
The investment is reportedly being made to help Volkswagen secure the raw materials needed for its electric vehicles.
The Canadian investment marks Volkswagen’s first investment in the mining industry.
The deal will see Patriot Battery Metals supply Volkswagen with 100,000 metric tons of lithium over 10 years, representing a quarter of the miner’s total production.
The lithium material will supply Volkswagen’s battery plants in North America and Europe, said the companies in a news release.
The investment comes as Volkswagen plows ahead with electric vehicles even as sales around the world slump.
Electric vehicle sales rose 7% in Europe during October but remain down on the year after policymakers reduced support for purchases.
Lithium producers such as Patriot Battery Metals have been hit hard by the slowing electric vehicle market, with inventories of the raw material piling up across the globe.
Consolidation among miners and lithium producers is occurring. Rio Tinto (RIO) has offered $6.7 billion U.S. to acquire Arcadium Lithium (ALTM), for example.
Patriot Battery Metals, which is headquartered in Vancouver, British Columbia, is seeking to build a large lithium mine in Quebec north of Montreal.
Last year, the company sold a 5% stake to Albermarle (ALB), the world’s largest lithium producer.
The stock of Patriot Battery Metals has declined 66% this year and currently trades at $3.41 per share, making it a penny stock defined as any security that trades for less than $5.