The stock price tripled! Tesla mulls acquisition of Sigma Lithium.

Tesla Inc. has been considering buying battery metal producer Sigma Lithium Corp., which is in high demand for the metal used in electric vehicle batteries, people familiar with the matter said.

The electric carmaker run by Elon Musk has been in discussions with potential advisers about a takeover, the people said, speaking on condition of anonymity because of the confidentiality of the information. The Sigma lithium mine is one of several mining options Tesla is exploring as it considers its own refining business, a person familiar with the matter said. Shares of Sigma soared more than 25% in after-hours trading.

Sigma Lithium's largest shareholder has been exploring the possibility of selling the company and gauging interest from miners and automakers, people familiar with the matter said. Its largest investor (46 per cent) is Brazilian private equity fund A10 Investimentos, which Sigma co-chief executive Ana Cabral-Gardner helped set up. Co-CEO Calvyn Gardner also owns a stake in the company.

People familiar with the matter said the current discussions are at an early stage and a deal may not be reached. Potential suitors may be hesitant to make a bid after the company's share price has tripled in the past 12 months, and shareholders have high expectations for the share price. Sigma's owners could also wait for the company's major projects to be further developed before seeking an exit, the people said.

A representative for Tesla, Elon Musk, did not respond to a request for comment. Sigma Lithium's Cabral-Gade declined to comment on the "rumors". The company is developing a large lithium deposit called Grota do Cirilo in Brazil. The company said in December that it was considering nearly tripling lithium production from the project by 2024 after a survey showed the project's mineral reserves were 63% higher than previously estimated.

Recently, major automakers have been more aggressively entering the mining industry to lock in supplies of metals needed for electric vehicle batteries. General Motors Co. is said to be bidding for part of Vale SA's base metals business and took a stake in Lithium Americas Corp. last month to help develop a mine in Nevada.

Sigma Lithium's Toronto-listed shares soared as lithium prices surged, giving the company a market capitalization of C$4.2 billion ($3.1 billion). Demand for the silvery-white metal, which is key to making batteries for electric vehicles, has vastly outstripped supply in the push to electrify transportation away from fossil fuels. Sigma Lithium could also attract interest from large miners and metals customers. Rio Tinto Group, the world's second-largest mining company, is actively looking to acquire lithium mines but is not interested in Sigma Lithium for now because its asking price is too high, one of the people said. The company has already signed supply agreements with LG Energy Solution and Japanese trading house Mitsui.