Nickel Asia [NIKL 3.29, up 2.5%; 34% avgVol] [link] is in talks with Sumitomo Metal Mining (SMM) to sell NIKL’s 15.625% stake in Coral Bay Nickel Corp. (CBNC), which is a nickel smelting and refining company in Palawan. CBNC processes low-grade nickel ore for export. NIKL increased its stake in CBNC back in 2022 when it purchased an additional 5.625% interest in CBNC from SMM, after SMM had increased its stake the previous year through share purchases from Mitsui and Sojitz. When NIKL originally increased its stake in CBNC, it said the move was “in furtherance of its commitments toward sustainability, environmental protection, and renewable energy, since the processing… by CBNC allows the utilization of cobalt and nickel… for manufacturing electric vehicle batteries.”
MB bottom-line The last three years have not been great for CBNC. NIKL’s vice president said that “increasing operating costs and weakening (metal price)” hurt CBNC’s profitability, and that this “divestment is seen to have a positive impact [NIKL] in furthering its ambitious growth and diversification objectives.” While the over-supply of nickel has suppressed nickel prices on the global open market, some analysts (like Fitch) consider the current low price to be something of a floor for the commodity, with some upside that could come from potential supply disruptions. Given the persistence of the oversupply problem, if I were a shareholder of NIKL, I’d be screaming for the company to branch out into renewable energy of any type. It already has 172 MW of solar through a joint venture with Shell Investments, and it has enough footprint that could be interesting near major cities like Puerto Princesa and Surigao.
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