Leading Japanese trading house Mitsubishi Corporation has invested in a joint venture to develop a lithium mine in Canada. The move comes as competition heats up for supplies of the metal used to make batteries for electric vehicles.

Mitsubishi on Tuesday said it will acquire a 7.5-percent stake in the venture for 18 million US dollars. It is partnering with Canada's Frontier Lithium to develop the mine in Ontario and a processing plant for the mineral. Mitsubishi has the option to increase its stake to 25 percent.

The two firms aim to start production at the mine in 2027. They project annual output of the processed material to reach 20,000 tons, or enough to make batteries for 300,000 electric vehicles.

The global effort to decarbonize economies is driving a surge in demand for materials like lithium. China is currently the world's biggest user of the metal and one of the largest suppliers.

The backdrop to the Mitsubishi deal is a memorandum signed by Japan and Canada in September to cooperate in ensuring the stable supply of critical minerals.

Japanese trading house Mitsui & Co. has also extended funding to a Canadian company developing a mine in Quebec to produce graphite, another material used in EV batteries.