13 Uniquely Positioned Nickel Mining Stocks (2022)
If you are invested in investing in the raw materials market and hedging against inflation then Nickel Mining Stocks are definitely worth looking into — Nickel has many factors working for it that we’ll go in-detail about below that make it likely to not only stay in high demand, but also remain in short supply — which means high profits and expansion opportunities for companies in the sector.
Shifts in geopolitics and consumer goods have led to an increase in demand for nickel, which seems to be translating into increasing stock and share prices long term, and investors seem to be seeing a larger return on their invested money.
There is one thing that has not been mentioned enough when looking at this industry: the unique positioning of the companies involved — there are only four major players in the global nickel mining industry, with two of them being based in China and Russia.
This means that if any of these companies were to go bankrupt or fall out of favor with consumers (like in the instance of the war in Ukraine), it would cause a domino effect that could take down the entire industry — or rather take down the effected companies in particular while making others (covered below) skyrocket in value as the nickel they produce becomes even more valuable.
This article will look at the top 13 nickel mining companies that we believe are uniquely and advantageously placed — We will focus on which companies can benefit from the current geopolitical climate while considering each companies expansion timeline to meet the rising nickel demands EV’s are causing.
First we’ll start with our investment thesis for Nickel stocks, particularly the mining stocks, and then we’ll go into our picks in the industry. Not all companies will be US-based or listed — however all will be investable via most stock brokers.
Table Of Contents
A Brief Overview Of The Nickel Mining Industry
The world’s largest producer of nickel is currently Indonesia, followed by the Philippines, New Caledonia, and Canada. The United States produces about 3% of the total amount produced globally as production in the US has been more or less flat while other countries have begun producing way more nickel than ever before.
Having so little production in the USA has it’s advantages — lower costs, less regulation, and overall more profits for shareholders — however it also comes with major issues as the US lacks the ability to influence supply in a major way and is entirely subject to market supply and demand mechanics when it comes to acquiring nickel for domestic industries and government applications.
The global nickel market is a market that currently relies on over 20 billion dollars worth of new nickel being produced every year to sustain it — and global nickel demand has sustained a rise of around 4% to 5% for many years now — many expect this number to increase if EVs experience outsized adoption.
Do note that 4 to 5% increase in demand in a commodity business like mining is NOT small at all and is massive growth — and as it’s hard to keep up with such demand growth prices of Nickel are likely to continue to inflate in the coming years, allowing Nickel Mining companies to maintain excellent margins, even as inflation soars.
Nickel Mining Company & Commodity Bull Thesis
With the macro outlook out of the way, the overview of the market, it’s time to get into why nickel mining as an industry, and nickel as an asset class, is uniquely positioned to outperform in the coming years in our opinion, and how
Nickel is an incredibly important metal when it comes to the world economy – not only does it make up the vast volume of coins, it is also one of the metals which is incredibly resistant to corroding and rusting. This means that it is an utterly invaluable ingredient for all kinds of important metal alloys, as it can prolong the life of other kinds of metal — the most notable is steel, which requires nickel (and chromium) to become stainless steel.
While most of us are used to seeing stainless steel pans, and likely even have some in our kitchens, many parts of the world have yet to gain access to these metals enmass and are nearly exclusively cooking with inferior materials like aluminium — as emerging markets continue to need more stainless steel the demand for nickel will go up. Cooking pans is just one example of the increased demand though — there’s many factors causing increased emerging market demand for stainless steel.
Nickel is also a key component of lithium-ion batteries – and the consumer demand for this kind of battery is only set to increase as electric cars become more prolific – with the EU placing an effective ban on petrol and diesel cars from 2035.
Combining these factors and many others — such as sanctions against some of the top nickel producers in the world (Russia and China) — the bull case has never been this strong for Nickel and nickel mining companies in our opinion. Of course there’s risks — recessions will reduce demand, potentially muting the bullish drivers for Nickel if the economic situation in developed economies continue to show weakness.
6 Large-Cap Nickel Stocks to Consider:
I’d like to be very clear about the large-cap nickel mining stocks — they’re HUGE companies worth billions of dollars — they have dozens of mines often in many countries around the world and mine far more than just Nickel. If you’re looking for general precious metals exposure these companies are the ones to go with, but if you want to simply invest in Nickel Miners I’d say going for one of the small-cap stocks we cover further in the article is more what you’re looking for, albeit risky.
With that being said these are the big large-cap nickel producers in the world that are worth considering. There are a few others, but they’re in hostile jurisdictions that are outright hostile to capital of foreign investors, so we won’t be covering them below as we consider them uninvestable.
Vale SA (NYSE: VALE)
Vale is the leading player in the global iron ore business, and it is also the biggest miner of nickel in the world. It operates mines in Brazil, Australia, and Canada, and it is responsible for around 30% of the world’s nickel supply – and is the main supplier of nickel to Tesla Motors ($TSLA).
Vale is also the largest exporter of iron ore in the world, as well as having a competitive position in the cobalt and the copper market. The company was founded in 1858, and it is listed on the NYSE — meaning it’s a great option for US investors who want exposure to nickel, but want the company to not be wholly reliant and dependent on the price of nickel or the performance of just a couple mines — as Vale has many many mines all around the world.
BHP Billiton Ltd. (ASX: BLT; NYSE: BHP)
BHP is another big name in the mining sector, and it is the second-largest producer of nickel in the world after Vale — okay there is norilsk nickel which is bigger than BHP and nearly the same size as Vale, however they’re Russian-based, Russian-Owned, and Russia-Listed — I have no qualms with Russian equities, but I don’t feel like they’re investable for westerners currently due to geopolitical risk.
With that being said, BHP is one of the world’s largest miners of iron ore, coal, gold, zinc, lead, and silver. BHP was founded in 1907, and it is listed in both Sydney and London — but you can easily buy ADR shares via US based brokerage accounts as well.
In recent years, they have grown their commitment to increasing Nickel production — sinking their funds into nickel mining operations in both Tanzania and Canada.
Glencore PLC (NYSE: GLNCY)
Glencore is the world’s third-biggest commodities trader, and they are also one of the largest independent suppliers of nickel.
Founded in 1967, the company has its headquarters in Switzerland, but it trades on the New York Stock Exchange. They were recently named ‘Miner of the Year’ by the World Economic Forum, and they are currently the world’s fourth-largest producer of nickel.
In addition to operating mines in Chile, Zambia, Indonesia, and Russia, Glencore also owns stakes in other companies such as Freeport McMoran and Anglo-American, two other large globally diversified miners that produce modest amounts on nickel in their own right.
Sibanye Stillwater Limited (NYSE: SBSW)
Sibanye Stillwater is an international mining company headquartered in Johannesburg, South Africa. Founded in 1993, Sibanye Stillwater is listed under Johannesburg. Historically, they mined precious metals, but more recently, they have moved over to operating within the nickel and copper market.
They own the Santa Rita nickel mine, which is among the top producing global nickel mines, and can produce a whopping 16,000 tons of nickel each year. Recently, in the summer of 2021, SSL purchased a nickel processing facility in France for €65 million – showing a commitment to the nickel sector, and a want to expand it to new markets.
Anglo American PLC (LON: AAL)
Anglo American PLC is well-diversified miner that produces the majority of palladium in the world, but also quite a bit of nickel — overall while a good mining stock that’s generally priced well their nickel production as a percent of revenues is quite low compared to the other big companies mentioned in this list — and especially compared to the smaller companies mentioned in this list.
Regardless they’re an option to consider if you do want a diversified miner — they lack exposure to riskier markets at large and aren’t likely to suffer geopolitical risks like some of the large mining companies we aren’t covering in this article.
First Quantum Minerals Limited (TSE: FM)
First Quantum Minerals also has the majority of their revenues from non-nickel mining commodities, predominantly copper, but they have a decent chunk of nickel exposure for a large mining company — and lets be honest copper is another great mineral with many factors going for it — so even if they’re really a copper miner more than a nickel miner they’re hardly a bad option, and in our opinion are definitely worth considering.
Keep in mind if you want high nickel exposure you’ll have to buy pure-play nickel mining stocks mentioned below, as large companies like mentioned above are simply too big to only be in the nickel industry — as the nickel industry isn’t actually that large compared to other mineral mining.
2 Medium-Cap Nickel Stocks to Consider:
Like the large-cap stocks these stocks, while we’d say are good choices, are not pure-play nickel mining companies, as in the mining industry once a company grows to a few hundred million dollar valuation they generally begin to diversify into other metals to ensure a downturn in any specific metals price doesn’t bankrupt them.
IGO LTD (NYSE: IIDDY / ASX:IGO)
IGO is an Australian company that produces nickel from mines across the country — however like First Quantum Minerals they’re also a huge copper producer and aren’t very diversified beyond this — which is good if you believe in the future of copper and nickel like we do, but not if you aren’t so confident in coppers demand drivers continuing.
The company is focused on producing high-grade nickel laterite ores (and copper), which can then be smelted into nickel using traditional methods or through newer technologies. Their nickel is one of the lowest cost nickels on the market, producing around 30,000 tonnes of nickel every year.
IMPORTANT NOTE — IGO LTD has multiple joint-partnerships including with a Chinese firm in the lithium space (Tianqi Lithium Corporation) which may carry a higher geopolitical risk, as it’s not unheard of for such partnerships to fall apart in times of hostilities.
Lundin Mining Corporation (TSE: LUN)
There’s nothing much to mention in regards to Ludin Mining Corporation — they’re a diversified miner with a lack of geopolitical risk and have an above-average exposure to nickel and other high-demand minerals — they’re not a pure-play Nickel stock, but they’re a reasonable choice to include in an overall mining portfolio or for those who want a lower-risk way to gain exposure to nickel.
5 Small-Cap Nickel Stocks to Consider:
Small-caps are really where you want to be if you want pure-play nickel exposure and believe in the industry — but keep in mind they’re MUCH riskier than the larger more diversified mining companies we covered above — so diversifying between many stocks are extra important, as it’s not unreasonable for small mining companies going bust if the market they’re involved in declines suddenly, or one of the mines they have has troubles.
Talon Metals (NYSE: TLOFF)
Talon Metals is a Canadian company that is a newcomer to the nickel market — They operate a developing mine in Minnesota in conjunction with the metals mining giant Rio Tinto.
As a business, their aim is to provide a domestic source of green metals for the growing electric vehicles trade. When their trade is up and running, they have promised that all the nickel that they produce will be sourced in a socially responsible and environmentally friendly way, so this is a great company to invest in if you have concerns about the environment, or believe ESG commitments will cause premiums to be paid for their metals.
Nyrstar NV (NYSE: NYRSTAR)
Nyrstar is a Dutch multinational corporation based in Amsterdam, Netherlands — They own a number of businesses within the metals industry, including a large stake in the Brazilian iron ore company Companhia Vale do Rio Doce (CVRD), and they are also the world’s fifth-largest producer of nickel, as well as the world’s seventh-largest producer of aluminum — this is despite them being a small-cap company, meaning they have a high percent of revenues in the nickel sector, making them a good choice if you want nickel exposure — albeit not quite 100% pure-play.
Canada Nickel (NYSE: CNIKF)
The name says it all — Canada Nickel is a nickel mining company based in Canada and is basically a pure-play nickel mining stock, so if you want to have direct exposure to the nickel market then they’re pretty much the ideal stock for this, although they’re beginning to diversify a bit now as they grow.
Other than having high nickel exposure they have another unique selling point that makes them uniquely positioned to perform well in the coming years — and that’s a commitment to make ‘zero-carbon’ nickel that’s ‘green,’ amongst other metals they produce, and this will likely get their products to trade at a premium with companies that have ESG mandates.
North America Nickel (NYSE: WSCRF / TSXV – NAN.V)
North American Nickel is another Canadian-based Nickel Miner, that is the closest to a pure-play you’ll get along with Polymer and Canada Nickel — they have revenues in copper as well that are quite high, but this is simply due to copper and nickel often being found together. They focus on nickel mining however and have yet to diversify into a wide variety of mineral mines.
Keep in mind as a small mining company North American Nickel only has a few mines, so if any have issues it’d be extremely problematic — with that being said there’s low risks of issues at their mines due to the jurisdictions and placement of the mines.
PolyMet Mining Corp (NYSE: PML / TSE: POM)
PolyMet Mining is a Canadian company that operates a nickel mine in Hibbing, Minnesota — The mine is located near Lake Superior, and it is the only active open pit mine in North America. The company focuses on extracting nickel from low-cost deposits of nickel oxide ore, so their costs theoretically should be quite low — lower than other mines, however in practice this company has had some historic performance issues.
If you believe that’ll be changing however they have a large exposure to nickel, and are a good choice as a turn-around play — although personally we’re not investing in them and would rather go with one of the other small companies mentioned above.
Final Thoughts & Conclusions
As you can see, there are many companies involved in the nickel industry, and all of these companies have unique strengths and weaknesses. Nickel is a promising sector to dive into as an investor, albeit not a very exciting sector — but most good investments aren’t exciting, but rather boring businesses that do something simple and do it well — like move rocks from one place to another and sorting them, which is what all these mining companies do. Simple and boring. Perfect.
If you want to know our strategy for the nickel sector it’s to pick a few small-cap nickel companies and add to our existing positions in larger miners that have exposure to nickel — we wouldn’t dare go all in on on of these stocks, especially the smaller pure-play nickel ones, as there’s no real benefit to being all in one vs diversified between many nickel miners.