Western Australia is a key Australian jurisdiction when it comes to nickel. Find out which major nickel stocks in Western Australia investors should watch.
Nickel gets a lot of love these days. Besides its applications as a base metal, it’s discovering rising popularity as a metal necessary for electric vehicles thanks to its role in battery technology.
Nickel is a vital component in lithium-ion batteries, which are seeing “hockey stick”-like production rates around the world as electric vehicles become more prevalent.
According to the Australian government, the country holds around 19.7 million tonnes in economic reserves of the metal, making it a top nation for nickel reserves, as well as a top nation for nickel production with 160,000 tonnes produced in 2021.
There was a significant decrease in production from 2019’s 180,000 tonnes to 2021’s output — attributed to the pandemic’s impact on supply lines — but Australia is still ranked fifth globally behind Indonesia, the Philippines, Russia and New Caledonia.
The key jurisdiction within Australia when it comes to nickel is the mining behemoth Western Australia, where the top mining company in the world — BHP (ASX:BHP,NYSE:BHP,LSE:BHP) — operates three huge mines. It makes sense that most nickel activity would be there, as the state accounts for about 90 percent of Australia’s economic reserves of the metal.
Why invest in nickel stocks in Western Australia?
Western Australia is an attractive jurisdiction, and has been ranked highly by the Fraser Institute for many years in a row — most recently it came in first place in 2021 after placing fourth in 2020.
To get exposure to the companies operating in Western Australia, investors will need to go through the Australian Securities Exchange (ASX), or through a dual-listed company in their country of origin. Here’s a handy guide on how to go about investing in companies on this Australian exchange.
Nickel stocks in Australia are almost all operating in Western Australia, with only a handful of companies elsewhere in the country. The top mines overall in the nation are Ravensthorpe, Murrin Murrin and Nickel West Mines, which are owned and operated by Canada’s First Quantum Minerals (TSX:FM,OTC Pink:FQVLF), the Anglo-Swiss company Glencore (LSE:GLEN,OTC Pink:GLCNF) and BHP (ASX:BHP,NYSE:BHP,LSE:BHP), respectively.
Each company is plowing millions into the region in order to get the most out of the jurisdiction, as Australia’s competitors are less developed, less reliable and riskier investments.
In the 2020 to 2021 year, a government report showed that the nickel industry in Western Australia is a highly valuable sector worth about AU$3.5 billion. As a top producer of nickel that accounts for 7 percent of global production, the outlook for nickel in Western Australia is bright.
Which companies mine nickel in Western Australia?
Which nickel stocks are both listed on the ASX and operating in Western Australia? The key operator is of course BHP, which contributes a huge share of Australia’s entire nickel output. Learn more about BHP as well as two other major Australian nickel producers below.All data was gathered from TradingView’s stock screener on October 5, 2022, and market caps were above AU$900 million at the time.
1. BHP Group
Market cap: AU$101.95 billion; current share price: AU$40.50
BHP Group is one of the largest mining companies in Australia and a major nickel producer. In its 2022 report for its financial year ended June 30, the company shared it had produced 76,800 tonnes of nickel.
BHP’s Nickel West has both high- and low-grade nickel ore sources, with its low-grade ore mined at the Mount Keith open-pit mine and its high-grade ore mined at the Cliffs and Leinster underground mines. Nickel West is a “fully integrated mine-to-market” structure that increased the value of the company’s supply chain operations in Western Australia.
Market cap: AU$911.1 billion; current share price: AU$15.03
IGO (ASX:IGO) owns and operates the Nova nickel-copper-cobalt operation in the Fraser Range, which is in the southern region of the state. The Nova operation was discovered in 2012 and quickly moved through the construction phase to the operational phase by the end of 2017. The 2022 Annual Report showed that Nova produced 26,675 tonnes of nickel. While these figures are lower than in previous years, the company is hopeful for continued growth coming out of the pandemic.
3. Mincor Resources
Market cap: AU$920.27 million; current share price: AU$1.97
Mincor Resources (ASX:MCR) is the owner of the Kambalda Nickel Operation (KNO), which is made up of three mines in South-central Western Australia. After the company’s announcement to restart the mine in 2020, a major highlight of the 2022 annual report was the progress of the Kambalda Operation, which processed its first ore in May 2022 and had its first reportable revenue of AU$25.3 million in the June 2022 report.
Besides the big three companies above (and the Canadian and Anglo-Swiss operators in the state), other nickel companies on the ASX operating in Western Australia are Azure Minerals (ASX:AZS), Ardea Resources (ASX:ARL,OTC Pink:ARRRF), Poseidon Nickel (ASX:POS) and Auroch Minerals (ASX:AOU).
This is an updated version of an article first published by the Investing News Network in 2021.
Securities Disclosure: I, Marlee John, hold no direct investment interest in any company mentioned in this article.