This little-known ASX small cap is on fire

This little-known nickel producer is strongly positioned thanks to a collaborative agreement with Tsingshan, the world's largest stainless steel producer.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Nickel Mines Limited (ASX: NIC) is a little-known nickel producer which floated on the ASX in August of last year. Nickel Mines has seen its share price rise over 50% in the past month coinciding with the announcement of first production at the company's new furnaces and a rally in the price of nickel.

Below is a summary of the Nickel Mines situation.

  • The company owns an 80% economic interest in the Hengjaya Nickel Mine located in Indonesia.
  • The company is focused on producing nickel pig iron, which is used in the production of stainless steel.
  • Nickel Mines has collaborated with Tsingshan, the world's largest stainless steel producer, to construct a Rotary Kiln Electric Furnace (RKEF) plant. This plant has developed as an expansion of an existing production facility owned by Tsingshan, the Indonesian Morowali Industrial Park (IMIP).
  • Nickel Mines holds a 60% interest in the RKEF plant which is currently in the latter stages of development, with full-scale production set for later this year.

There are several reasons why I think Nickel Mines is strongly positioned for the future.

Low operating costs

Nickel Mine's production costs for nickel pig iron are expected to be in the first cost quartile of global nickel pig iron producers.

Firstly, the RKEF plant's integration with Tsingshan's existing production facilities allows for reduced electricity costs, stemming from Tsingshan's purpose-built power plant which offers cheaply priced electricity.

Secondly, the use of RKEF electric furnaces in the nickel production process results in lower average production costs.

And lastly, the vertically integrated nature of the Hengjaya Nickel Mine and RKEF furnace allows for cheap nickel sourcing. Indonesian Government bans on the export of raw materials prevent cheap nickel from being exported elsewhere.

Low capital intensity

The RKEF plant is an extension of Tsingshan's existing facilities, which has the consequence of significantly reducing capital intensity. Through this collaboration, Nickel Mines is saving on capital expenditure that would typically be spent on supporting infrastructure and site preparation.

Nickel price tailwinds

Nickel prices have been on the rise lately, gaining 15% in the past month. Additionally, resolution in US-Sino trade relations would likely fuel further increase in the price of nickel, provided that the Chinese or global economy doesn't experience an unexpected slowdown.

Innovations in battery technology have been predicted to be long-term drivers of the nickel price in the future, with nickel metal hydride batteries having applications in electric vehicles.

Should you invest $1,000 in Terracom Limited right now?

Before you buy Terracom Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Terracom Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Cale Kalinowski has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

Miner looking at a tablet.
Resources Shares

BHP shares are up 9% in a month. Are they still good value?

Is Australia’s largest miner a big opportunity?

Read more »

Three miners wearing hard hats and high vis vests take a break on site at a mine as the Fortescue share price drops in FY22
Resources Shares

Did you catch what happened with the big 3 ASX 200 mining stocks in April?

BHP, Rio Tinto, and Fortescue all reported their latest mining results in April.

Read more »

Miner looking at a tablet.
Resources Shares

After its earnings result, what's Macquarie's price target on Fortescue shares?

Let’s dig into what Macquarie thinks of Fortescue after its quarterly update.

Read more »

Two mining workers on a laptop at a mine site.
Resources Shares

The Mineral Resources share price is down 72% in a year. Time to pounce?

Two top experts ran their slide rules over Mineral Resources shares. Here’s what they found.

Read more »

Miner looking at a tablet.
Resources Shares

Mineral Resources share price shoots 15% higher on third-quarter report

The ASX 200 iron ore and lithium giant has released its 3Q FY25 activities report.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

Why Macquarie says this ASX 200 mining stock could rocket 67% in a year

Macquarie forecasts a big potential rebound for this diversified ASX 200 miner.

Read more »

Female miner smiling at a mine site.
Resources Shares

3 reasons why the Fortescue share price could still be a buy

Here’s why I view Fortescue as an opportunity.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Resources Shares

Here's the latest earnings forecast out to 2029 for Rio Tinto shares

Let’s unearth what this mining giant is predicted to achieve.

Read more »