ASX-Listed Stocks to Watch Amid Rising Nickel Demand

In the last six years, the demand for nickel has improved significantly. If we look at the nickel futures, since 2016, the value of the nickel futures has increased by 205% and are currently positioned at its all-time high prices. Nickel futures have reached the US$23,154 mark on 19 January 2021.

As per one of the reports published by S&P Global, the world’s primary nickel production is expected to reach 3.12 million mt in 2022. This value represents a growth of 10% compared to 2021. At the same time, the demand for nickel is projected to increase 18% from 2021.

Why is the demand for nickel increasing?

One of the key reasons for rising nickel demand is the growing market for nickel, cobalt, and aluminum batteries. These metals are used in electric vehicles. As per ANZ, the demand for nickel for stainless steel and non-stainless steel production will hold up in 2022.   

At present, Indonesia is the largest producer of nickel globally, followed by the Philippines. However, there are other countries as well where major deposits are mined. These countries include Australia, Canada, Brazil, China, and Russia.

Many nickel players on ASX have also witnessed growth in the stock price in the last one year. This article will look at a few ASX-listed nickel players and see how they are positioned amid the existing nickel boom.

IGO Limited (ASX: IGO)

IGO Limited is a top ASX-listed exploration and mining company specializing in discovering, developing, and operating high-quality assets focused on metals critical to enabling clean energy. The Company is 100% owner of the Nova nickel-copper-cobalt Operation.

In the September 2021 quarter, the Company reported Group sales revenue of AU$189 million and an underlying EBITDA of AU$97 million, resulting in a strong EBITDA margin of 51%. Net profit for the quarter was AU$46 million, comprising AU$13 million IGO share of Lithium JV Net Profit. By the end of the quarter, the Company had net cash of AU$552 million and no debt with an established AU$450 million debt facility remaining undrawn.

At Nova, the Company noted that its quarterly nickel production and cash costs were better than pro-rata guidance which, along with robust commodity prices, resulted in Nova continuing to attain solid free cash flows and high margins.               

Mincor Resources (ASX: MCR)

Mincor Resources is an ASX-listed mineral exploration company that focuses on re-establishing sustainable, high-grade nickel production in the Kambalda district of WA. The Company is on track to begin sustainable, high-grade nickel sulphide production in this region in early 2022, with the development of its Kambalda Nickel Operations in progress.

The Company has excellent nickel sulphide Resource and Reserve inventory coupled with a solid balance sheet with debt and equity funding in place. It is progressing mine development and construction activities Cassini nickel mine as well as Northern Operations.

On 15 December 2021, the Company announced that it achieved a significant milestone as it closes-in on the restart of nickel production in Kambalda, with development ore met before plan in two development headings at the Northern Operations.

In September 2021 quarter, MCR achieved significant milestones and established strong bases which would support the Company in the near future. MCR witnessed four huge nickel sulphide intersections at the Golden Mile during the quarter. It also saw numerous huge sulphide intercepts at Hartley greenfields prospect within an interpreted 3 km channel.

Poseidon Nickel (ASX: POS)

Poseidon Nickel Limited is a nickel sulphide exploration and development company. It has three projects within 300 km from Kalgoorlie in the Goldfields region of WA and a resource base of ~400K tonnes of nickel and 180K ounces of gold.

Recently, the Company released an update on Black Swan 1.1Mtpa “Fill the Mill” project and the Bankable Feasibility Study process. The Company highlighted that resource drilling programs on the Black Swan Disseminated orebody and within the Silver Swan Channel continue to give encouraging results, which display the chance for a rise in the mining inventory for the restart. Additionally, understanding these resources would support POS in building its understanding of the mineralogy and metallurgy and improve the ore blending plan to attain the ideal concentrate specifications.

What Next?

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Nickel has a wide range of applications. Over 80% of nickel is used to make alloys as the metal brings toughness, strength, rust resistance, and numerous other electrical, magnetic, and heat resistant features. Nickel-cadmium rechargeable batteries are commonly used in several devices such as radios, phones, clocks, etc.

These devices are a necessity, and the demand for these products coupled with the application of nickel in vehicle manufacturing and many more would drive the demand in the coming time.

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