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Tesla has been weighing a takeover of battery-metals miner Sigma Lithium, people with knowledge of the matter said, amid rampant demand for the metal used in electric vehicle batteries, Bloomberg reported.

The EV maker run by Elon Musk has been speaking with potential advisers about a bid, said the people, who asked not to be identified discussing confidential information. Sigma Lithium is one of multiple mining options Tesla is exploring as it mulls its own refining, one of the people said.

Sigma’s US shares surged more than 25 per cent in aftermarket trading.

Sigma Lithium’s biggest shareholder has been exploring a potential sale of the company and gauging interest from miners and carmakers, the people said. Its biggest investor, holding 46 per cent, is A10 Investimentos, a Brazilian private equity fund that Sigma Co-Chief Executive Officer Ana Cabral-Gardner helped establish. Co-CEO Calvyn Gardner, also owns part of the miner.

Deliberations are in the early stages and may not lead to a transaction, according to the people. Potential suitors may hesitate to bid after shares tripled in the last 12 months and on high price expectations by the owners, the people said. Sigma’s owners could also wait to develop the company’s main project further before seeking an exit, according to the people.

Elon Musk, representatives for Tesla did not respond to requests for comment. Sigma Lithium’s Cabral-Gardner declined to comment on “rumors.”