Are these the best nickel stocks to watch?
With the global shift towards clean energy, nickel’s popularity has risen amid the demand for electric cars. Explore some of the biggest nickel stocks to watch and why you may consider taking a position.
Nickel stocks: what you need to know about the industry
Nickel is a silver-white substance and a precious commodity, used mostly in the production of coins, electronics, as well as lithium-ion and EV batteries. The popularity of electric vehicles in recent times has contributed to nickel’s high demand.
Nickel is sourced in two ways: mining and recycling. The nickel mining industry is made up of many companies that are involved in excavation of different minerals around the world and selling the metals for profit. According to reports, EVs will represent more than two-thirds of passenger vehicle sales by 2040.1
As one of the most common elements found on earth, the nickel market is prone to volatility – from oversupply of the metal to crises in different parts of the world.
How to trade in nickel shares
There are two different ways to take a position on nickel shares: trading and investing. With us you can only trade via CFDs. When trading, you speculate on the price of nickel stocks rising or falling without owning the shares outright. You will go long if you think the share price will rise and go short if you think it will drop.
The table below shows the differences between a trading and investment account:
|Trading nickel stocks||Investing in nickel stocks|
|Take a position using a CFD trading account||Investing means using a share dealing account (which IG International doesn´t provide)|
|Leverage your exposure – you’ll only pay a deposit to get exposure to the full position size||You would pay the full value of the shares you bought upfront|
|Leverage means both profit and loss will be magnified to value of the full trade – so you could gain or lose more money than you’d expect2||You might get back less than what you put in because as much as the value of shares can rise, it can also fall as well|
|In some countries, you can offset losses with CFDs3||In some countries, you would invest tax-free with a stocks and shares ISA|
|Take shorter-term positions||Focus on longer-term growth|
Before you open your position, here are a few steps that will help you kickstart your journey to trading with us:
Five best nickel stocks to watch
Note that these companies have not been chosen as the best nickel stocks alone, but rather based on various factors including market cap, future growth prospects and latest results. This list was last updated on 18 February 2022.
As the second-largest nickel producer in the world, Vale also mines Copper and cobalt minerals that are essential in the production of electric cars. The mining giant is headquartered in Brazil, but also mines in Canada, Indonesia, and New Caledonia.
According to Reuters, Vale estimated its nickel production at 175,000 to 190,000 tonnes in 2022.5 Vale also produces and sells iron ore to companies that make steel internationally. This contributes to the market capitalisation of $75 billion reported at the time of writing.
In Q3 2021, Vale fell below analyst expectations, reporting net revenue of $12.7 billion compared to the $14.1 billion forecasted. The company attributed the drop to a weak iron ore demand in China causing the price to lose steam. The nickel and copper prices were higher compared to the previous year quarter.4
BHP Group mines several minerals in its portfolio, producing nickel, iron ore, gold, copper, and many other metals. Based in Australia, BHP Group’s nickel mining and production stretches five continents: Asia, Europe, Australia, and North and South America. In 2021, the company produced 89,000 tonnes of nickel, selling over 85% to the EV battery industry.6
The company’s nickel production in FY22 is expected to be between 85,000 and 95,000 tonnes. This is despite a dip of 20% year over year (YoY) due to planned maintenance across the supply chain.7
Following its announcement of an agreement to pursue a merger of its petroleum business with Woodside Petroleum, BHP is on course to create one of the best independent energy companies in the world.
Also, with four major projects in the pipeline, BHP could see its market cap of $166 billion go up in 2022.8 BHP expects the demand for nickel to surge in the coming years, with 314 million electric vehicles estimated to be on the road by 2035.9
Norilsk Nickel (also known as Nornickel) focuses on the production of non-ferrous metals such as copper, palladium and platinum. The company is headquartered in Russia and has been having accelerated rates of success in nickel production.
The mining company’s stock surged after recording $1.26 billion in revenue in the first half (H1) of 2020. In the same year, the mining company was the largest nickel producer in the world, with over 178,200 tonnes produced.8 Nornickel followed up with a 34% increase in H1 2021 financial performance and is on course to have another prolific year.
The bullish optimism is because Norilsk experienced disruptions at its underground mines and concentrator last year yet emerged with an increase in revenue. Also, despite a volatile period in 2021, the nickel market prices increased by 16%, surpassing the $20,000 mark.9 Norilsk reported a $45 billion market cap at the time of writing (18 February 2022).
Glencore is one of the largest nickel mining and producing companies in Asia, Africa, Australia, North America and Europe. Headquartered in Switzerland, Glencore has a diversified portfolio that includes mining of copper, iron, zinc, aluminium, cobalt, lithium, and other metals.
The Swiss mining giant produced 110,000 tonnes of nickel in 2020, selling 149,000 tonnes of nickel in the same period. In 2021, it produced 102,300 tonnes of nickel, indicating a 7% drop.10 According to the company report, this was due to lengthy scheduled statutory shutdown and maintenance issues at Murrin Murrin earlier that year. The Murrin Murrin mine is one of Australia’s largest nickel and cobalt producers, accounting for 31% of Glencore’s nickel production in 2020.11
Glencore is expected to produce 115,000 tonnes of nickel in 2022, recovering from the impact that COVID had on production in 2020.12 It remains just to be seen just how much the expected projection will improve the market cap, which was $47 billion at the time of writing (February 2022).
IGO is an Australian miner that produces metals required for sustainable clean energy. Its portfolio includes the production of copper, nickel, cobalt, gold, lithium, and other metals.
At the time of writing (February 2022), IGO was in advanced talks to acquire rival mine Western Area for a cash sum valued at A$1.1 billion (about $793 million).12 The deal would go a long way to boost IGO’s total nickel production from 25,000 to 27,000 tonnes in FY22 on a pro-forma basis to between 41,000 and 44,000 tonnes.13
The acquisition would add to IGO’s other mine Nova, which generates around 29,000 tonnes of nickel annually. The company’s stock has been trading publicly since March 2021. This presents trading opportunities, seeing how its share price started at $9.58 and is now traded at $16 per share. IGO had a market cap of $9.14 billion at the time of writing.
Where is nickel found and produced?
Nickel is found in earth’s crust, where it’s mined and melted to change its form. It can be found in two types of deposits: laterite deposits and magmatic sulphide deposits.
Laterite deposits are weathered rinds formed on ultramafic rocks in tropical climates. Magmatic sulphide deposits form when magmas derived from the earth’s mantle rises into the crust.
For each deposit, the technique of mining nickel differs. In laterite deposits, the earth is moved to extract nickel-rich strata and remove large boulders. For sulphide deposits, they are mined underground where there’s a high concentration of platinum-group elements.
Following extraction, nickel is refined, and purified to create a metal matte that can be melted into a different form.
Nickel shares summed up
- Nickel is a silver-white metal found on the earth’s crust and mined to make various products like stainless steel, alloys and batteries
- Nickel is an important component in the creation of electric vehicle batteries, with its demand coinciding with the growth of the EV industry
- With us, you can get exposure to nickel stocks through trading via CFDs
- When trading nickel stocks, you’ll use derivatives like CFDs, to speculate on the commodity’s price rising and falling
1 Bloomberg, 2022
2 Traders stand to lose more than their deposit margin and their loss will exceed their initial deposit when they use leverage. Therefore, it’s important to take steps to manage your risk
3Tax laws are subject to change and depend on individual circumstances. Tax law may differ in jurisdictions.
11Australian Mining, 2022
13S&P Global, 2022
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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