The price of nickel, a key component in the production of electric vehicle (EV) batteries, has hit a decade high. The rise reflects a broader boom in the commodity market due to falling stockpiles of critical metals and a production increase of EV’s from car manufacturers.

On Wednesday, the price of nickel rose by 4% to a high of $22,745 a tonne, with stockpiles falling for the 51st day. China, for example, saw a record low in warehouse stocks of the metal, totalling only 4,859 tonnes as of Wednesday.

The high is a product of a steady increase over the past month, with nickel gaining upwards of 12% in value, reflecting a greater consumer interest in EVs. For instance, in the UK, one in every four new car sales was an EV.

According to the International Energy Agency , demand for nickel must grow to 19 times its current production level by 2040 to hit the targets set out in the 2015 Paris agreement.

New projects

Earlier this week, two significant deals were agreed upon. Talon Metals  signed a nickel supply deal with Telsa, with Tesla receiving 75,000 tonnes of nickel concentrate from the Tamarack Nickel Project under a six-year term.

Additionally, BHP  signed an agreement of $90m to invest in the Kabanga nickel project in western Tanzania to secure a 17.8% stake. Located in western Tanzania, the Kabanga project is expected to produce an annual nickel equivalent of 65,000 tonnes.

“The recent plethora of announcements around nickel development projects is testament to the confidence in future market fundamentals on the back of the twin engines of stainless steel and battery demand,” said Colin Hamilton, an analyst at BMO Capital Markets.