Shares of Sinyuan Zm Technology surged after the Chinese supplier of automotive metal parts unveiled a plan to invest CNY1 billion (USD138 million) to expand its production capacity of magnesium alloy parts for new energy vehicles.

Sinyuan [SHE: 301398] was trading up 8.9 percent at CNY57.77 (USD7.92) as of 1.45 p.m. in Shenzhen today.

The plant will be built locally and will have an annual production capacity of three million sets of high-strength, large-scale magnesium alloy and aluminum alloy precision mold parts, the Ningbo-based firm announced on Nov. 10. Sinyuan will also research, develop, and produce supporting die-casting molds.

The plant will be built in two phases, the first of which will have an investment amount of CNY700 million (USD95.9 million), expected to be completed and put into full operation within 36 months after signing the land use right agreement, Sinyuan added.

Magnesium alloy products are one of the most important new materials to promote automotive lightweight, Sinyuan pointed out. They are mainly used in powertrains, lamps, center consoles, display systems, and seats of NEVs.

Investing in the new plant will help enhance the proportion of the magnesium alloy business to the company’s total and consolidate its leading position in the industry, Sinyuan said.

Revenue from magnesium alloy and aluminum alloy precision die-casting products accounted for almost 88 percent of Sinyuan’s total last year, according to the company’s latest annual report.

Electric vehicle manufacturers, such as Tesla, Nio, and SAIC Motor’s NEV unit, and traditional carmakers, including Volkswagen, Audi, and Ford, are among Sinyuan’s important customers.