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Prices of rare earth metals used for battery making have soared in recent days as the parabolic growth in the electrification of vehicles forces automakers to lock in supplies. 

Nickle, one of the key components in lithium-ion batteries, hit a seven-year high on Tuesday, rising as much as 3.4% to $21,500 a ton on the news that Tesla signed a nickel supply deal with Talon Metals Corp’s Tamarack mine project in Minnesota. 

Notice how nickel trading on the London Metal Exchange marches higher as stockpiles continue to slump on increasing demand due to accelerated electric car production. 

On Monday, lithium prices hit a new record high. Lithium carbonate trading in China was about 300,000 yuan (just over $47k per ton), an increase of about six times from January 2021. Soaring prices come as electric-car makers, such as Tesla, report exponential growth in the US, Europe, and China. 

Lithium, nickel, and cobalt are the essential elements in battery technology powering electric vehicles that steadily replace combustion engines. 

Michael Widmer, head of metals research at Bank of America, told Bloomberg, “we have so many stories all pointing in the same direction,” indicating that “people do realize that there is potentially a tightness in supply going on, and that is taking nickel prices ultimately higher.”

Even though prices for rare earth metals are increasing, the overall battery pack costs remain relatively inexpensive compared with a decade or so ago – however, 2022 will be the first year in years that battery pack prices will slightly increase. 

A very different type of commodity supercycle could be playing out, driven by a green revolution, not China’s industrial economy.

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