Nickel Industries (ASX: NIC) Surges on Quota Approval: Is This Beaten-Down Stock a Buy?

Nickel Industries Gains Quota Approval: What’s Next for Investors?

Nickel Industries (ASX: NIC) finally has the green light investors have been waiting for. Indonesian authorities approved an increase to the company’s 2025 ore sales quota from 9 million to 10.5 million wet metric tonnes, allowing sales to restart immediately. For a stock trading around AUD 0.70, down roughly 26% over the past year, we believe this approval could mark a turning point. With nearly 2 million tonnes of stockpiled ore ready to ship and several growth catalysts ahead, the risk-reward profile looks increasingly attractive for patient investors.

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Why the RKAB Approval Changes the Investment Case

The RKAB quota system controls how much ore Indonesian miners can sell each year. The delay in receiving this approval had forced Nickel Industries to pause ore sales, creating uncertainty that weighed heavily on the share price.

What makes this approval particularly significant is the accompanying five-year environmental permit (AMDAL). This longer-term clearance supports the company’s application for a much larger 2026 quota targeting 19 million wet metric tonnes, more than double current levels. If approved, this would dramatically increase revenue capacity.

In our view, the environmental permit is equally important for another reason. It enables Indonesia’s first in-pit tailings storage with a pipeline linking the Hengjaya Mine to the company’s new ENC processing plant. This positions Nickel Industries as a potential low-carbon nickel producer- an increasingly valuable differentiator as EV battery makers demand cleaner supply chains.

Strong Operational Performance Supports the Bull Case

Beyond the regulatory win, the underlying business is performing well. The company delivered US$87 million in adjusted EBITDA during Q3 2025, with its nickel processing operations posting a 20% quarter-on-quarter improvement despite lower sale prices. This margin resilience suggests management is executing effectively.

The biggest near-term catalyst is the Excelsior Nickel Cobalt (ENC) project, on track for commissioning in early 2026. This next-generation plant will produce around 72,000 tonnes of nickel annually and, importantly, will be the first globally capable of producing three different battery-grade nickel products. This flexibility allows the company to capture the best prices across different market segments.

Analyst consensus points to meaningful upside. The average price target sits around AUD 0.94, representing approximately 27% above current levels. Simply Wall St estimates the stock trades roughly 34% below fair value. We believe the valuation looks cheap relative to the growth pipeline, though execution remains key.

The Investor’s Verdict for Nickel Industries

For growth-oriented investors comfortable with commodity exposure, Nickel Industries offers a compelling opportunity at current prices. The combination of a beaten-down valuation, resolved regulatory uncertainty, and multiple 2026 catalysts creates an attractive setup.

However, investors should acknowledge the risks. Nickel prices remain under pressure from Indonesian oversupply. The company’s heavy reliance on Indonesia means regulatory changes could impact profitability. And while the 2026 RKAB expansion appears likely, it still requires final approval.

For growth investors, we believe current levels offer a reasonable entry point ahead of ENC commissioning. More cautious investors may prefer waiting for 2026 RKAB confirmation before adding positions.