Indonickel producer Nickel Industries reports record quarterly earnings
\nMD Justin Werner says US is realising it can\u2019t meet EV targets without nickel from the country, which is seeking a free trade agreement and IRA compliance
\nNIC in discussions with 20 \u201ctop tier\u201d automakers and battery producers as battery nickel production ramps up<\/p>\n
Now Australia\u2019s largest listed nickel producer, Indonesian-focused Nickel Industries (ASX:NIC)<\/a> says it is talking to as many as 20 EV makers about battery nickel supply, saying Western automakers are recognising they need to deal with the world\u2019s biggest nickel supplier to feed their businesses.<\/p>\n It comes as Aussie nickel producers and explorers lobby US regulators not to open<\/a> Inflation Reduction Act compliance for Indonickel via a free trade agreement with Joko Widodo\u2019s government.<\/p>\n Concerns about environmental standards and the role Chinese finance plays in the Indonesian nickel industry hover over the sector \u2014 NIC\u2019s largest investor is a subsidiary of the world\u2019s largest stainless steel and nickel company Tsingshan and a big part of its success is its business relationship with Chinese industrialist Xiang Guangda\u2019s empire.<\/p>\n At 1.6Mt last year, Indonesia made up around half of the world\u2019s nickel supply. It is the only jurisdiction which can scale up further at pace to match rising demand from batteries and the stainless steel sector.<\/p>\n While Australian, Brazilian and Canadian producers have enjoyed a cozy position in the past given most class 1 nickel for EVs came from nickel sulphide mines, Indonesian laterite producers and their Chinese backers have found technical solutions to bring on battery grade nickel production at scale in recent years.<\/p>\n NIC MD Justin Werner said the reality was Indonesia would need to be a part of the West\u2019s EV dreams.<\/p>\n \u201cIt\u2019s safe to say that the US is looking very, very, very hard at a free trade agreement with Indonesia. The reason for that is they\u2019ve come to the realisation that the nickel supply is not going to come from North America,\u201d he said.<\/p>\n \u201cIn fact, there\u2019s not really many jurisdictions that it is going to come from. Hence, that\u2019s why there\u2019s some very active dialogue going on at the moment. <\/p>\n \u201cWe would obviously see any free trade agreement between Indonesia and America as as a very strong positive not just for us, but I think strong positive in terms of an endorsement of the nickel industry in Indonesia, and how that is evolving with continued foreign investment.\u201d<\/p>\n \u00a0<\/p>\n Nickel Industries sold 34,263t of nickel metal in the September quarter, most of it in the form of nickel pig iron, a class 2 nickel product only used in stainless steel.<\/p>\n But it also produced 5285t of nickel matte, a product that can be converted into battery grade nickel sulphate.<\/p>\n Its RKEF lines, which produced 33,852t of nickel metal in the September quarter, generated US$97.6m on a 100% basis in EBITDA, more than double the US$43.9m generated in the June quarter.<\/p>\n That came with substantially stronger margins of US$3009\/t on NPI and US$1971\/t on nickel matte (US$1585\/t and US$1410\/t respectively in June) as costs come down across its four RKEF projects \u2014 Hengjaya, Ranger, Angel and Oracle.<\/p>\n NIC also produced 1410t of nickel in mixed hydroxide precipitate from its 10% share of the HPAL based Huayue Nickel Cobalt Project, which has operated for two months.<\/p>\n Its Hengjaya mine, a supplier to the Indonesia Morowali Industrial Park where the Hengjaya, Ranger, Oracle and Huayue projects are based, also reported record EBITDA of US$23.1m in the September quarter on a record 3.629Mt of production, rising 93.6% despite lower prices.<\/p>\n Looking further ahead, NIC said it reached a positive financial investment decision on a \u2018next generation\u2019 72,000tpa HPAL plant, which it will own 55% of alongside Tsingshan subsidiary and 45% owner Shanghai Decent called the Excelsior project and carries a \u2018capex guarantee\u2019 of US$2.3 billion.<\/p>\n That ownership stake could be sold down later in the piece.<\/p>\n Werner said the company has already started marketing its product from the Huayue plant to \u201cglobal Tier-1 EV and battery makers\u201d.<\/p>\n \u201cWe\u2019ve had a very strong response not just to uptake of HNC product, but also to offtake and even possible small participation in the ENC project,\u201d he said.<\/p>\n \u201cWe are running a process and we already have in excess of 20 of the top tier 1 global AV and battery makers showing significant interest. These include Europeans, North Americans, I think the penny has finally dropped. <\/p>\n \u201cEveryone has realised that the only real place if you want nickel of any scale is out of Indonesia.\u201d<\/p>\n Werner said the company is now producing nickel metal on an annualised basis of 135,408t, demonstrating the remarkable speed with which Indonesia\u2019s nickel sector has been able to ramp up.<\/p>\n BHP (ASX:BHP)<\/a>, which is expected to produce between 77,000-87,000t of nickel metal in 2023 is operating a business in WA that has been around since the first nickel sulphide discovery in Kambalda in 1966.<\/p>\n $3.3 billion capped Nickel Industries has been listed for just five years, when it initially took 60% ownership of two RKEF lines with a production capacity of 16,500t Ni equivalent.<\/p>\n \u00a0<\/p>\n <\/span> As the final reporters of the September season wrap up today the ASX materials sector is headed for a loss, sliding 0.54% for the day so far.<\/p>\n On the month ASX mining stocks are down a bare 0.28%.<\/p>\n The iron ore stocks fell slightly into the red, while gold producers copped a whack from the market as prices slid back below US$2000\/oz overnight.<\/p>\n Among the standouts were coal miner Whitehaven Coal (ASX:WHC)<\/a>, which netted a win yesterday as activist investors Bell Rock Capital revealed it did have a larger stake than it had previously revealed based on derivative holdings.<\/p>\n It has now sold a substantial portion of its stake, selling 35 million ordinary shares leaving it with an ordinary and derivative position of 5.31% of Whitehaven\u2019s stock.<\/p>\n Bell Rock was able to secure a strike against Whitehaven\u2019s remuneration report at its AGM last week, which passed with a no vote of over 40%, prompted by complaints its $6.4b purchase of the Daunia and Blackwater mines from BHP would reduce returns to shareholders like Bell Rock.<\/p>\n That exposes WHC to a second strike and potential spill motion at next year\u2019s AGM.<\/p>\n Whitehaven had attempted to get the Takeovers Panel involved, calling on it to prevent Bell Rock from voting its stake at the AGM. The panel said no thank you.<\/a><\/p>\n \u00a0<\/p>\n <\/span>\u00a0 The post Ground Breakers: Will EV makers have to make do with Indonesian nickel?<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Doubling up<\/h2>\n
Nickel Industries (ASX:NIC) share price today<\/h2>\n\n
\n\u00a0<\/p>\nMaterials falls as reporters wrap<\/h2>\n
Ground Breakers share prices today<\/h2>\n\n
\n<\/span><\/p>\n