Nickel Names

The series on battery materials continues with a look at nickel.  The metal has numerous applications in part because it is resistant to corrosion.  Consequently, nickel helps preserve product quality in chemical reactions.  Nickel also has high electrical conductivity and good magnetostrictive properties.  No wonder then that battery manufacturers have found a use for nickel in high performance batteries.

The market for nickel is large and has attracted a number of significant players.  According to the International Nickel Study Group nickel production exceeds 2.0 million metric tons per year. The top ten producers are responsible for 60% of total output. 

Russia’s MMC Norilisk Nickel is the largest producer of nickel along with palladium, platinum and copper.  The company produces about 285,000 metric tons of nickel each year.  Shallower trading in the stock may be contributing to higher price to sales and earnings than most of the other nickel producers in the group.

Nickel production is a by-product of the iron ore production of Vale, SA. The Brazilian company is the second largest mining company in the world.  It also holds second place in nickel by producing 260,000 metric tons per year.  It operates in thirty-eight countries and keeps over 126,000 people busy. 

BHP Billiton has nickel assets in Colombia at the Cerro Matoso mine as well as the Nickel West and Worsley mines in Australia.  The company produces 154,000 metric tons of nickel each year.  BHP is a highly diversified resource company that is no better bargain that MMC Norilisk with price-to-sales ratio of 3.18 and price-to-cash flow of 7.31.

China’s Jinchuan Group is the fourth largest producer of nickel, but its primary production is copper.  The company brings about 127,000 metric tons of nickel to the market.

Glencore is a vertically integrated natural resource company that producers a list of metals and minerals.  Glencore merged with Xstrata in 2013 and then acquired Minara Resources to round out its nickel portfolio.  The Xstrate deal put the company in fifth place for nickel production at about 98,400 metric tons per year.  Glencore shares trade at 11.17 times forward earnings.  The company had suspended its dividend in 2015, but reinstated a small dividend in May and September 2017.

Investors have more options to make a play in nickel.  However, none offer a pure play and only one, Canada’s Sherritt International, can be considered a small-cap company.  Sherritt produces about 58,000 metric tons of nickel every year from joint venture operations in the Canada, Cuba, Indonesia and Madagascar.  Sherritt is not profitable, which probably explains why the stock trades at a relatively modest 1.50 times sales.

Listing Country	Company		Ticker		Mkt Cap Mlns		Revenue Mlns
Russia	MMC Norilisk Nickel		GMKN.MCX		168,000.0		na
U.S.	Vale, SA		VALE		63,710.0		33,140.0
U.S.	BHP Billiton Ltd.		BHP		122,860.0		33,660.0
China	Jinchuan Group Ltd.		2362.HK		5,370.0		151,000.0
Germany	Glencore Plc		8GC.SG		59,997.0		na
Canada	Sherritt International Corp.		S.TO		424.3		283.0
France	Eramet, SA		ERA.PA		2,440.0		3,290.0
Japan	Sumitomo Metal Mining Co.		8053.TYO		2,387.0		na
U.K.	Anglo American Plc.		AAL.L		20,860.0		23,560.0
Currencies match listing country

Ticker	Last Price	52 Week Low	52 Week High		Volume    000s		Price/ Sales		Price/       F-EPS	Price/ CFO
GMKN.MCX	10,560.00	7,677.00	11,938.00		108		3.298		9.96	na
VALE	11.87	7.47	11.94		24		1.92		10.32	5.72
BHP	44.14	33.37	44.62		1,990		3.18		na	7.31
2362.HK	1.11	0.55	1.67		8,920		12.28		na	neg
8GC.SG	4.18	3.06	4.34		46		na		11.17	na
S.TO	1.43	0.74	1.67		1,260		1.50		neg	neg
ERA.PA	92.38	36.43	92.90		75		0.74		16.83	5.24
8053.TYO	1,904.00	1,363.50	1,914.00		779,600		na		9.13	na
AAL.L	1,490.00	950.10	1,534.50		10,130		0.89		719.81	3.18
Currencies match listing country

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.