TOKYO (Reuters – The strong demand for electric vehicles (EVs) will drive up the global nickel demand, Sumitomo Mineral Mining in Japan said Tuesday.

Sumitomo Metal (OTC-) supplies lithium-ion batteries for Tesla (NASDAQ;) EVs. Sumitomo Metal said the demand for nickel for rechargeable batteries will rise to over 410,000 tonnes by 2022, from 330,000 tonnes in 2021.

Although nickel is mainly used for stainless-steelmaking, it also plays a critical role in lithium-ion batteries that are used to charge EVs. The demand will increase over the next few years.

Yusuke Niwa (general manager, Sumitomo Metal’s nickel sales and materials) stated that “Nickel demand is growing faster than we expected a year back.”

However, higher nickel prices might reduce long-term demand as companies will try to use less nickel and develop nickel-less batteries.

Sumitomo Metal predicted also that the global nickel shortage would shrink to 68,000 tonnes from 135,000 tonnes by 2021. This is because of an increase in nickel pig iron production (NPI), which Sumitomo Metal expects to reach more than 1,000,000 tonnes.

In 2022, global nickel demand is projected to rise 8.4% to 2.999,000,000 tonnes. However, the supply of nickel should grow 11.4% or 2.931million tonnes.

Japan’s nickel consumption is expected to grow 0.2% to 170.400 tonnes and supply to rise 1.6% to 168,800 tonnes.