What are ASX nickel stocks?
ASX nickel stocks are mining companies involved in the production of nickel. They can be mining giants like BHP Group Ltd (ASX: BHP), which already owns and operates multiple nickel mines around the world, or smaller capitalisation companies like Chalice Mining Ltd (ASX: CHN), which have nickel projects still in the development stage.
Nickel is one of the planet's most abundant and commonly used metals. Historically, we have used nickel in physical currencies – all Australian coins (including our 'gold' ones) are still made of nickel alloys.
Nowadays, because it is strong, durable, and highly resistant to corrosion, most of the world's nickel (about 70%) is used to produce stainless steel.
But nickel's use in emerging technologies – particularly battery technology – has some investors very excited about its prospects.
Why invest in ASX nickel shares?
Like lithium and graphite, nickel is one of the most critical raw materials used to build rechargeable batteries, including nickel-cadmium and nickel-metal hydride batteries and the lithium-ion batteries that power electric vehicles (EVs). Nickel's electrochemical properties enhance battery performance in several ways, including high energy density, long cycle life, and temperate stability.
As EV adoption took hold worldwide, market analysts predicted a significant rise in nickel consumption. Nickel is often combined with cobalt and manganese or aluminium to form cathode material in lithium-ion batteries. These batteries offer higher energy density, enabling longer driving ranges, which is critical for EV adoption.
Miners ramped up nickel production in response to the predicted increase in demand. At the same time, some automakers, such as Tesla and Volkswagen, shifted toward using lithium iron phosphate (LFP) batteries in specific models, which do not require nickel.
This has reduced the immediate demand for high-grade nickel. The stainless steel market, which uses Class 2 nickel, has also seen slower growth in recent years.
The combination of increased supply and reduced demand for nickel has resulted in an oversupply of the silvery-white metal. But much of the expansion in nickel production has been of Class 2 Nickel.
The availability of Class 1 nickel is more limited, and new mining projects for battery-grade nickel take years to develop. With few new high-grade nickel deposits being discovered, supply shortages of Class 1 nickel could emerge, driving prices higher
Top nickel shares on the ASX
Some of the largest mining companies on the ASX are major nickel producers, including BHP, RIO Tinto Ltd (ASX: RIO) and South32 (ASX: S32). Indonesia is by far the largest nickel producer on the planet, although Australia ranks a commendable fifth.1
Big miners like BHP, RIO and South32 would clog up the top 3 list of just about any ASX mineral producers, so we won't include them all below (just BHP, considering it's the largest miner currently trading on the ASX).
Depending on your risk appetite and investing objectives, many small and mid-tier nickel companies in the ASX are worth looking at outside the big miners. We've included a couple below ranked by market capitalisation from highest to lowest.
| Company | Description |
| BHP Group Ltd (ASX: BHP) | Diversified global mining giant involved in nickel production |
| IGO Limited (ASX: IGO) | Mid-tier mining and exploration company focussed on supplying the materials critical to the clean energy transition |
| Nickel Industries Ltd (ASX: NIC) | Vertically integrated nickel stock with multiple operations in Indonesia |
BHP
BHP will top almost any list of ASX mining and metals companies. It is the largest mining company listed on the ASX by market capitalisation, and its diversified mining operations span the entire globe.
BHP's nickel mines are in the Northern Goldfields, near Kalgoorlie in Western Australia. BHP added to its nickel portfolio when it acquired mid-tier mining company OZ Minerals for $9.6 billion in 2023.
By July 2024, however, BHP had announced the suspension of production at its Western Australian nickel operations, citing a global oversupply in the nickel market. The suspension decision is set to be reviewed in February 2027.
IGO
IGO is a good choice for investors seeking exposure to the metals and mining sector who also want to support the transition to green energy.
This mining and exploration company focuses on exploring, developing and operating mining projects that produce the materials used in clean energy systems. It owns and operates the Nova nickel-copper-cobalt operation and the Forrestania Nickel operation in Western Australia. IGO is also invested in a lithium joint venture.
In FY24, IGO reported underlying net profit after tax (NPAT) of $319 million, with underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $581 million. Although softer metal prices impacted performance, IGO finished the financial year with a higher cash balance and improved liquidity compared to FY23.
Nickel Industries
A vertically integrated nickel company, Nickel Industries has interests in multiple nickel mines in Indonesia, including the Hengjaya mine. Over the past decade, many new nickel operations have been launched in Indonesia, which is by far the world's largest nickel producer.
Nickel Industries produces low-cost nickel pig iron, used to make stainless steel. It's essential to remember this fact if you're considering investing in Nickel Industries, as it means the company doesn't tap into the EV transition.
Nickel Industries frequently collaborates with leading Chinese nickel and stainless steel producer Tsingshan Holding Group, which is particularly active in Indonesia.
Advantages of investing in ASX nickel shares
Some of the benefits include:
Nickel is one of the most widely used industrial metals: Nickel possesses many properties that make it particularly useful in industry and manufacturing. Notably, its resistance to corrosion means it is a crucial component in stainless steel production. Historically, this constant level of demand has kept nickel prices relatively stable over time, reducing its risk.
The global transition to renewables could spur increased demand: The main reason to invest in nickel is to tap into the renewables theme. As the globe transitions away from fossil fuels, demand for EVs and other more environmentally friendly technologies will increase. This should drive up demand for nickel because of its use in rechargeable lithium-ion batteries.
And the cons:
The market has been turbulent recently: Despite its long and stable history, even nickel isn't immune to geopolitics. Massive price fluctuations since 2022 demonstrated that the nickel market can be risky. Global conflicts and trade embargoes can upset its price. Always consider the current environment before deciding to invest.
It is one of the most abundant metals on the planet: Although demand for nickel may increase in coming years, its ample supply means that prices may not increase as much as investors hope. Bigger miners can ramp up production quickly to meet rising demand, which could keep prices low and even force out junior players.
How are market conditions changing?
Although it's usually a stable and staid commodity market, nickel has been grabbing headlines in recent years.
Nickel prices skyrocketed early in 2022, shortly after the onset of the Russia-Ukraine conflict. Russia ranks number three on the list of the world's largest exporters of nickel, behind only Indonesia and the Philippines.
Uncertainties around the impacts of the war and the effects of Western-imposed sanctions sent the global nickel market into chaos.
A short squeeze on the commodity finally forced the London Metals Exchange to halt nickel trading for 12 days in March 2022 after prices surged to more than US$100,000 a tonne. For some context, the nickel price had barely edged above US$20,000 a tonne at any time over the previous decade.
Since then, the nickel price has decreased, particularly throughout 2023, and is now close to US$15,000 a tonne. While that might be a significant fall from the heady days of March 2022, it is still materially above pre-COVID prices.
Are ASX nickel shares right for you?
Investing in nickel is one of many ways to tap into the global renewables transition. Its use in the lithium-ion batteries required to charge EVs and other environmentally friendly technologies could see demand for the metal outstrip supply in coming years, potentially pushing up the price of ASX nickel stocks.
However, recent history has shown that even something as dull as nickel isn't immune to price volatility.
This shows how important it is to always carefully consider your financial situation and risk appetite before making any investment – and investing in ASX nickel stocks is no different.
- Additional reporting by Motley Fool contributor Kate O'Brien
Frequently Asked Questions
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There are many benefits to investing in nickel. After all, it is one of the world's most widely used industrial metals. Historically, nickel was always in demand, mainly due to its use as a currency, especially in the United States. More recently, nickel's strength, durability and anti-corrosion properties made it an ideal addition to stainless steel.
However, demand from the green energy sector is perhaps the most exciting reason to invest in nickel. Nickel is a critical ingredient in the rechargeable lithium-ion batteries used in electric vehicles (EVs). As the world transitions from fossil fuels and embraces green energy, nickel demand could outstrip global supply, potentially pushing up prices.
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Nickel's investment potential in 2024 looks promising due to its critical role in the transition to clean energy, particularly in electric vehicle (EV) batteries. As EV production increases, nickel demand is expected to rise, making it attractive for investors interested in the green energy movement. With demand projected to outpace supply, nickel could see long-term growth.
However, nickel prices can be volatile, influenced by global economic conditions and supply chain disruptions, particularly in major producing countries. While the long-term outlook is positive, short-term risks like geopolitical tensions and market fluctuations may affect prices. A diversified investment approach may help manage these risks.
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Plenty of great options are available to you on the ASX if you want to invest in nickel. A global mining giant like BHP Group Ltd (ASX: BHP) might suit investors looking for broad exposure to the commodities markets. BHP has an extensive portfolio of mining assets, producing iron ore, copper, coal, and nickel.
Mid-tier mining companies like IGO Limited (ASX: IGO) might suit investors who are more interested in the global green energy transition. IGO focuses on producing the mineral raw materials necessary to support clean energy, including cobalt, lithium, copper, and of course, nickel. And, if you're an investor who simply wants exposure to the nickel market alone, a small mining company like Nickel Industries Ltd (ASX: NIC) might provide what you're looking for. This pure-play, vertically integrated nickel company produces low-cost nickel pig iron.
