Nickel Industries has announced a binding framework agreement to acquire a 36 percent stake in CNE, a major high-pressure acid leach processing facility under construction in Indonesia, without contributing any cash to the transaction. The deal represents a significant strategic win for the company, as it secures access to approximately 28,357 nickel tonnes per annum of mixed hydroxide precipitate output at a production cost of roughly US$10,500 per tonne, while simultaneously validating the economic value of its broader Sampala mining project portfolio.
The transaction structure is elegant in its simplicity: Nickel Industries will monetise an 18 percent equity stake in its Sampala mining assets, valued at approximately US$44.7 million, in return for an effective 36 percent interest in CNE, which carries an implied valuation of US$241.6 million. This represents a clear valuation uplift on the Sampala assets and demonstrates that Indonesian investor PT Jaya Agung Investasi sees sufficient economic merit in the nickel ore supply chain to commit to funding the entire construction of the CNE facility. The CNE project itself is valued at US$671 million on a pre-money basis, with the mining assets backing it valued at US$1.342 billion.
A critical feature of this deal is that Nickel Industries faces no construction risk or capital outlay. JAYA assumes responsibility for building and financing CNE, including working capital requirements, with commissioning expected to commence in mid-2027. This provides Nickel Industries with certainty around timeline, cost, and production volume, which is particularly valuable in a capital-intensive sector where cost overruns are common.
Post-transaction, Nickel Industries will remain the largest operator and shareholder in the mining companies at 42 percent, with JAYA holding 30 percent and local partners holding 28 percent. This structure maintains operational control while distributing risk appropriately across partners who bring complementary capabilities. The arrangement also signals confidence from both JAYA and local Indonesian investors in the project’s long-term economics.
For investors, the announcement addresses several key concerns that have weighed on Nickel Industries’ stock. The company gains exposure to HPAL processing capacity, a critical bottleneck in the nickel supply chain for electric vehicle batteries, without the significant capital expenditure that has constrained other producers. The secured offtake at a fixed cost basis provides visibility over medium-term margins and removes commodity price exposure at the processing stage. The key catalysts to watch will be the progression of CNE construction through mid-2027 and the achievement of nameplate capacity utilisation once commissioning begins. Meeting the timeline and cost targets outlined in the framework agreement could validate the entire project model and potentially pave the way for further similar arrangements. The announcement is price sensitive and has been classified as material by the ASX.
View the full ASX announcement (PDF)
About Nickel Industries Limited (ASX: NIC)
Nickel Industries Limited is an ASX-listed mining company that owns and operates a portfolio of nickel mining and downstream processing assets located primarily in Indonesia. The company produces nickel through high pressure acid leach (HPAL) technology and rotary kiln electric furnace (RKEF) projects, supplying nickel for stainless steel production and the electric vehicle supply chain.
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