Refinery Licensing Delay and Rising Costs Cloud Nickel Industries’ Growth Outlook

Record Performance at Hengjaya Mine

Nickel Industries Limited has delivered a standout quarter for its Hengjaya Mine, reporting record ore sales of 3,021,678 tonnes and a mining EBITDA of US$41.4 million for the June 2025 quarter. This represents a 33% increase in EBITDA compared to the previous quarter, driven by higher nickel ore prices and improved sales volumes despite a 14% increase in royalties imposed by the Indonesian government. The mine’s EBITDA per wet metric tonne rose 25%, reflecting enhanced operational efficiency and favourable market conditions.

Operational Challenges in RKEF and HPAL Segments

The company’s rotary kiln electric furnace (RKEF) operations experienced a 4% decline in nickel production to 30,463 tonnes, primarily due to scheduled kiln realignment and maintenance activities. These maintenance efforts, including power plant overhauls, led to a 5% increase in cash costs and a 24% drop in adjusted EBITDA to US$33.7 million. Meanwhile, the high-pressure acid leach (HPAL) operations saw a 51% decrease in attributable EBITDA to US$10.8 million, largely attributed to timing shifts in the NIC trading division’s sales and contract settlements. Despite this, HPAL margins per tonne improved by 12%, supported by stronger metal payabilities and cobalt prices.

Project Development and Expansion Progress

Nickel Industries is advancing its growth pipeline with notable progress at the Sampala Project, where extensive drilling has been completed and a feasibility study for a 6 million wet metric tonne per annum operation has been submitted for approval. Construction of haul roads and infrastructure is underway, creating hundreds of jobs and positioning the project to capitalize on strong ore demand amid regional shortages.

At the Excelsior Nickel Cobalt Project, the company has mounted all major equipment at the HPAL smelter and is preparing for commissioning of the integrated refinery. However, commercial operations are now expected to commence in the first quarter of 2026, pending receipt of the Izin Usaha Industri (IUI) license. This delay has prompted a strategic focus on completing the sulphate circuit and smelter by year-end.

Sustainability and Community Initiatives

In a significant step toward enhanced environmental, social, and governance (ESG) transparency, Nickel Industries released its 2024 Sustainability Report. The report highlights the formal establishment of the Nickel Industries Foundation, which aims to support education, health, and conservation projects in local communities. The company also secured approval to develop a conservation and biodiversity area within the Hengjaya Mine concession, underscoring its commitment to responsible mining practices aligned with global standards.

Financial Position and Outlook

Financially, the group reported an adjusted EBITDA from operations of US$86 million for the quarter, with strong cash flows supported by dividend receipts and shareholder loan repayments. Inventory levels increased due to raw material stockpiling at RKEF entities, impacting operational cash flow. The company continues to pursue regulatory approvals to increase its mining quota from 9 to 19 million wet metric tonnes per annum, which could significantly boost production capacity in the near term.