Nickel Industries up 8% as SpaceX Supplier Buys Into US$2.4B ENC HPAL Project

Sphere Corp’s US$2.4B Valuation Deal Sends Nickel Industries Higher

Today, Nickel Industries (ASX: NIC) surged 8% following an announcement that Sphere Corp will acquire a 10% interest in the ENC HPAL project, implying a project valuation of approximately US$2.4 billion.

What stands out to us is the quality of the incoming partner. Sphere is a South Korea-listed premium alloy and precision metals manufacturer with deep exposure to the aerospace industry. Notably, the company is a vendor to SpaceX, supported by a 10-year offtake agreement of up to US$1 billion to supply high-end nickel and superalloys for rocket components.

From our perspective, this transaction provides strong third-party validation of the ENC HPAL project’s strategic value and long-term relevance. The involvement of an industrial customer with direct exposure to advanced aerospace applications reinforces the project’s positioning within higher-value nickel markets and helps explain the positive market reaction we saw today.

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SpaceX Supplier Backs Nickel Industries

With Sphere acquiring a 10% equity interest, the funding is expected to complete in early Q1 2026. Importantly, Sphere has also entered into an offtake agreement at market prices for additional volumes above its proportional 10% share, providing further demand support for the project.

Nickel Industries has confirmed that its 44% ownership in ENC remains unchanged, as the transaction is being executed through Decent Resources reducing its shareholding rather than Nickel Industries itself.

Sphere’s involvement represents meaningful third-party validation of ENC’s product quality, and the offtake arrangement creates a pathway into higher-value end markets. In particular, Sphere’s existing relationships in aerospace and advanced manufacturing could open new supply opportunities across North American aeronautical and aerospace markets, which we see as a positive long-term optionality for the ENC project.

Nickel Use Cases and Growth Prospects

According to the US Geological Survey, around 65% of nickel consumption in Western economies is currently used in stainless steel, with a further 12% directed into superalloys. While nickel demand from batteries continues to grow, the mix of end uses is gradually shifting toward more advanced applications.

Nickel’s corrosion resistance and high temperature strength make it a critical input for superalloys used in aerospace and defence, particularly in applications that require durability and repeat use.

These material properties are essential for rocket components, where performance under extreme heat and stress directly supports longevity and reusability. In our view, this highlights that beyond batteries, higher value industrial and aerospace demand represents an increasingly important long-term driver for nickel markets.

What investors need to know about NIC

Nickel Industries owns a diversified portfolio of mining and processing assets that serve multiple end markets. The company’s primary exposure is to nickel pig iron, which supplies the stainless steel industry, while the ENC project is expected to produce approximately 72,000 tonnes of nickel metal per annum once fully operational.

In the 2025 first half, Nickel Industries generated around A$78 million in EBITDA and A$25 million in net profit. While sales were lower compared to 2024, profitability improved due to better cost control and a slowdown in depreciation, highlighting improved operational efficiency.

From a balance sheet perspective, the company benefits from a solid backlog of receivables across both current and non-current items, supporting near-term cash flow visibility.

However, net financial debt of approximately A$48 million remains a key consideration. A portion of this debt sits in senior unsecured notes carrying an interest rate of around 11%, which places pressure on free cash flow and makes debt reduction an important priority.

In our view, the balance sheet is asset rich but clearly leveraged. The underlying value of the assets is tangible, but debt servicing and refinancing risk remain relevant, particularly until ENC becomes consistently cash generative.