Nickel Industries delivered US$125.9 million of adjusted EBITDA in the September quarter, led by a second consecutive record from the Hengjaya Mine. Its new ENC HPAL project reached 50% of nameplate capacity, but severe dry conditions delayed the next step: commercial sales.
- Quarterly adjusted EBITDA rises 4% to US$125.9 million
- Hengjaya Mine ore sales jump 56% to 4.49 million wet metric tonnes
- Mine adjusted EBITDA reaches a record US$76.9 million
- ENC produces MHP and nickel cathode during commissioning
- Water shortages reduce RKEF output and delay ENC’s full ramp-up
Hengjaya Mine delivers a second record quarter
Nickel Industries Limited (ASX:NIC) produced US$125.9 million of adjusted EBITDA in the September quarter, up 4% from the June quarter, as its Hengjaya Mine supplied the standout result. Mine adjusted EBITDA surged 68% to a record US$76.9 million, while ore sales rose 56% to 4.49 million wet metric tonnes.
The improvement came despite a 6% decline in the mine’s average realised price to US$35.7 per wet metric tonne, reflecting a much larger share of lower-priced limonite sales. Limonite volumes more than doubled to 2.80 million wet metric tonnes, while unit operating costs fell 15% to US$18.5 per wet metric tonne as more ore travelled six kilometres to the ENC feed preparation plant rather than 24 kilometres to third-party customers. Nickel Industries said the mine has applied to lift its 2026 sales quota to 19 million wet metric tonnes.
The result extends the mine’s recent run of operational strength, following the earlier Hengjaya EBITDA record reported in the June quarter. The company’s 80%-owned mining operation is doing more than simply supplying ore: the shift towards internal processing is also reducing transport costs, although the filing does not quantify how much of the group result will ultimately depend on ENC reaching steady production.
ENC moves from commissioning towards first sales
ENC, Nickel Industries’ 46%-owned HPAL project, reached 50% of nameplate capacity within weeks of starting its ramp-up. All three autoclaves were independently tested at maximum capacity, and the project produced 4,840 tonnes of nickel and 494 tonnes of cobalt in mixed hydroxide precipitate, or MHP, during the quarter.
The integrated refinery also produced 818 tonnes of nickel cathode, meeting the stated NR9990 quality standard under ISO 6283:2017. That milestone follows the project’s first MHP production earlier in the year. ENC received an exemption from Indonesia’s restriction on MHP exports, but it made no sales during the quarter because its industrial business licence, known as the IUI, was still pending.
An onsite IUI inspection after quarter end produced no major findings, and Nickel Industries expects the licence in the fourth quarter of 2026. The project’s MHP cash cost was US$13,943 per tonne of nickel, while cathode conversion cost was US$3,888 per tonne, against a targeted US$2,500 per tonne at nameplate capacity. Those figures remain commissioning-stage measures rather than evidence of a fully established commercial run-rate.
Dry conditions cut RKEF output and delay the ramp-up
The immediate constraint is water. Hengjaya Mine received only seven millimetres of rain from the start of August to 21 October, compared with a 10-year August-to-October average of 474 millimetres, according to the company. Nickel Industries said the unusually severe El Niño-driven dry season limited ENC’s operating capacity and also began affecting water supply at the Indonesia Morowali Industrial Park.
RKEF production was broadly flat at 27,822 nickel tonnes, but sales fell 4% to 26,837 tonnes and adjusted EBITDA dropped 33% to US$40.7 million. Combined cash costs rose 4% to US$13,054 per tonne. The company reduced RKEF production to about 75% of nameplate capacity in October, while a planned four-month overhaul at Hengjaya Nickel has reduced that operation to about half capacity; completion is expected to lift HNI production by approximately 17%.
Nickel Industries Managing Director Justin Werner said the company was “very well positioned” to grow EBITDA once normal rainfall returns and ENC contributes cash flow, but the timing remains dependent on the wet season, which typically begins in December. ANI, on Halmahera Island, was unaffected and operated at 128% of stated nameplate capacity in October.
Expansion projects add funding and execution demands
Post-quarter end, ENC secured a US$245 million non-recourse project finance facility led by OCBC. The package includes a US$220 million seven-year amortising term loan priced at SOFR plus 2.00%, a US$25 million working capital facility and an accordion of up to US$800 million. The debt is not consolidated into Nickel Industries’ group debt, and the company said its 46% share of term-loan distributions is available for general corporate purposes.
At Sampala, Nickel Industries completed the first eight kilometres of a 24-kilometre haul road and drilled 274 holes covering 6,922 metres, while feasibility studies and approvals remained under review. The development sits alongside the earlier Sampala resource expansion, and its eventual contribution still depends on permitting, mine planning and infrastructure completion.
The company retained FY26 guidance for total capital expenditure of US$66 million to US$73 million, excluding the potential US$169 million payment for its 17.5% interest in TMI. TMI and CNE are expected to operate in 2027, with construction progressing at the wider HPAL complex. The company has also executed a US$169 million unsecured loan facility should funding be required for the TMI acquisition, adding another financing decision to an already expanding project pipeline.
Cash generation remains exposed to working capital
The headline EBITDA result did not translate into positive operating cash flow across every division. RKEF generated negative US$7.3 million of cash from operations during the quarter, while mining generated US$17.4 million and the HPAL trading division recorded negative US$27.4 million. The company attributed the movements mainly to higher receivables, inventory timing and the application of a customer advance to an August shipment.
Nickel Industries reported US$145.9 million of cash and cash equivalents at quarter end, alongside US$240.7 million of trade receivables and US$365.1 million of inventories. For the next quarter, the key tests are concrete rather than promotional: whether rainfall restores water availability, whether ENC receives its IUI and begins sales, and whether the new project-finance structure supports expansion without obscuring the cash demands of TMI, CNE and Sampala.
Bottom Line?
Nickel Industries has the production assets and financing to build its next growth phase, but the near-term result now hinges on rainfall, ENC licensing and the conversion of commissioning output into paid sales.
Questions in the middle?
- When will ENC receive its IUI and record its first commercial product sales?
- How quickly will normal rainfall restore ENC and Morowali RKEF production rates?
- Can Nickel Industries fund TMI, CNE and Sampala development while working capital remains a material cash drain?