Nickel Industries Optimises ENC Ownership as Strategic Partner Invests

About Nickel Industries Limited

Nickel Industries Limited (ASX: NIC) is an ASX-listed mining and downstream processing company with a portfolio of nickel assets located in Indonesia. Over the past decade, the company has established itself as a globally significant producer of nickel pig iron for the stainless-steel industry, underpinned by controlling interests in world-class mines and multiple rotary kiln electric furnace operations. More recently, Nickel Industries has embarked on a strategic transformation, repositioning its production profile toward the rapidly growing electric vehicle battery supply chain.

Central to this transition is the Excelsior Nickel Cobalt (ENC) project, a next-generation high-pressure acid leach operation designed to produce mixed hydroxide precipitate, nickel sulphate, cobalt sulphate and nickel cathode. ENC is expected to materially diversify Nickel Industries’ product mix while reducing its carbon intensity, aligning with global demand for cleaner, traceable battery materials. The latest announcement marks a significant milestone in the project’s evolution and ownership structure.

Completion of Sphere’s Strategic Investment

Nickel Industries confirmed the completion of Sphere Corporation’s acquisition of a 10 per cent equity interest in ENC, implemented through a reduction in the holding of Decent Resource, an affiliate of Shanghai Decent. The transaction implies a project valuation of approximately US$2.4 billion and brings a globally recognised advanced-alloys supplier into the shareholder register.

Sphere is a publicly listed Korean company specialising in high-performance specialty alloys for aerospace and advanced manufacturing, and is an accredited Tier 1 supplier to SpaceX. Management highlighted that Sphere’s decision to invest in ENC represents strong external validation of the project’s quality, sustainability credentials and downstream product potential. The partnership also strengthens ENC’s exposure to high-performance end markets where quality, traceability and reliability are paramount.

Revised ENC Acquisition Schedule and Ownership Outcome

Alongside Sphere’s investment, Nickel Industries reached agreement with its largest shareholder, Shanghai Decent, to revise the remaining ENC acquisition schedule. Under the revised arrangement, Nickel Industries will acquire a final additional two per cent interest in ENC, increasing its ownership from 44 per cent to 46 per cent and becoming the project’s largest shareholder.

The company will make a single final payment of US$46 million by 31 March 2026 for this additional stake, based on an implied valuation of approximately US$2.3 billion. This payment replaces and fully supersedes previously expected instalments totalling US$253 million that were scheduled for mid to late 2026. As a result, Nickel Industries has reduced its future expected cash outflows by US$207 million, materially enhancing balance sheet flexibility and providing certainty around its remaining acquisition obligations.

Following completion, ENC ownership will comprise Nickel Industries at 46 per cent, Decent Resource at 44 per cent and Sphere at 10 per cent.

Funding Structure and Credit Enhancement

To fund its ENC investment, Sphere secured a US$210 million senior secured amortising term loan from external lenders. To facilitate this financing, Nickel Industries has agreed to provide a credit enhancement, granting lenders recourse to NIC in the event of a Sphere default. Depending on the circumstances, Nickel Industries would either repay the outstanding loan and receive Sphere’s ENC shares or assume the loan and ownership directly.

Importantly, the structure gives Nickel Industries effective priority over Sphere’s 10 per cent ENC stake, ensuring that this interest cannot be acquired by third parties or competitors. Given the loan amortises over time and is smaller than Sphere’s total acquisition consideration, Nickel Industries’ contingent exposure remains lower than the value of the stake it could acquire in a default scenario. Nickel Industries will also receive compensation from Sphere for providing this support, appropriately recognising the value of the guarantee.

Sampala Ore Supply MOU Unlocks Additional Value

In a separate but complementary development, Nickel Industries announced it has executed a memorandum of understanding for the Sampala Project to exclusively supply up to 14 million wet metric tonnes per annum of limonite ore to a nearby HPAL project adjacent to ENC. The agreement spans a 15-year term with market-linked pricing, reinforcing long-term revenue visibility.

The MOU promotes cooperation in developing a feed preparation plant and connecting slurry pipeline between Sampala and the HPAL facility. Of particular note, the arrangement contemplates blending low-grade saprolite with limonite ore, enabling slurry transport of material previously considered uneconomic. Management described this as a first-of-its-kind solution that could unlock significant incremental value from the Sampala orebody.

Strategic Importance of ENC in the Battery Supply Chain

ENC represents Nickel Industries’ next major growth platform as it transitions toward battery-grade products. The project is expected to produce approximately 72,000 tonnes of nickel metal per annum at steady state, alongside cobalt products and nickel cathode. Compared with traditional nickel pig iron production, ENC is designed to materially reduce emissions intensity, supporting global decarbonisation objectives and customer sustainability requirements.

With demand for battery materials accelerating and OEMs increasingly focused on supply security, traceability and emissions performance, ENC’s scale and positioning are viewed as strategically significant. Nickel Industries’ increasing ownership further enhances its exposure to these favourable structural trends.

Outlook

Following the revised ownership and funding arrangements, Nickel Industries enters 2026 with improved financial flexibility, reduced acquisition risk and greater exposure to ENC’s long-term upside. Commissioning and ramp-up at ENC remain key focus areas, with management confident in the project’s ability to deliver diversified, lower-carbon earnings over time.

Combined with stable cash flows from its existing NPI operations and new downstream growth pathways, Nickel Industries appears well positioned to continue its transformation into a leading supplier to the global battery materials market.