Nickel is one of the three primary battery metals. Thanks to the global shift towards battery-dependent technologies, EVs, and solar farms, have seen an enormous surge in demand in the last decade.
Ironically, the most significant portion (about 70%) of the global nickel supply is not used for batteries but for making stainless steel.
Still, the metal has become a coveted investment thanks to its projected demand driven mainly by the EV battery industry. And one realistic way to gain exposure to this commodity is through the best nickel stocks in Canada.
Nickel As An Investment
Even though the stainless-steel industry claims most of the nickel is produced yearly, its future growth is expected to be driven by the EV boom.
Nickel As A Battery Metal
Lithium, cobalt, and nickel are three of the most prominent battery metals. Nickel is used in the cathodes of Li-ion batteries and contributes to a higher energy density in the batteries. Almost 58% of lithium batteries will use nickel by 2025. It also makes up a hefty percentage of the battery’s cost (about 21%).
These stats show that a lot of nickel is needed for car batteries as EV production grows. And unlike other metals, nickel also has another significant demand pool – the stainless steel industry.
With two competing industries, nickel prices may soar at a rapid pace. And with the demand and prices soaring, nickel is likely to become a highly coveted investment.
Canada is one of the world’s top ten producers of nickel (sixth in 2020).
Factors Affecting Nickel Stocks
Nickel, like other commodities, is subject to various factors that can influence its price and, by extension, the value of nickel stocks. Here are some primary considerations:
- Demand from the EV Industry: With the rise of electric vehicles (EVs), the demand for nickel in battery production has increased substantially. Any expansion or contraction in the EV market can significantly influence nickel demand and prices.
- Stainless Steel Production: Since around 70% of the world’s nickel is used in the production of stainless steel, any change in this industry can affect nickel prices.
- Global Economic Conditions: Nickel, being a crucial industrial metal, is sensitive to global economic conditions. During times of economic growth, demand for industrial metals usually increases, driving up prices. Conversely, during economic downturns, demand can decrease, leading to lower prices.
- Geopolitical Issues: Mining operations can be affected by political instability in nickel-rich countries. For example, export bans, increased taxation, or nationalization of mines can disrupt the global supply chain.
- Environmental and Regulatory Concerns: Mining companies face stringent environmental regulations, which can influence operational costs and viability. Any changes in these regulations can impact nickel stock valuations.
- Exploration and Development Risks: Not all exploration projects lead to profitable mines. Technical challenges, increased costs, or lower-than-expected ore quality can affect a mining company’s profitability.
Best Nickel Stocks In Canada
As the largest nickel producer in the Americas, Canada has a sizeable nickel industry. Most companies that primarily focus on nickel are micro or nano-cap. Larger mining companies with more assets and a more extensive metal portfolio are mid to large-cap. I’ve included a couple of American stocks as well.
- Canada Nickel Company Stock (CNC.V)
- Sherritt International Stock (S.TO)
- Horizonte Minerals Stock (HZM.TO)
- FPX Nickel Stock (FPX.V)
- Nickel 28 Capital Stock (NKL.V)
- Talon Metals Stock (TLO.TO)
- First Quantum Minerals Stock (FM.TO)
- Lundin Mining Stock (LUN.TO)
- Garibaldi Resources Stock (GGI.V)
- Vale SA Stock (VALE)
- Glencore Stock (GLNCY)
1. Canada Nickel Company Stock
Canada Nickel has 100% ownership of a potentially huge Crawford nickel-cobalt discovery in Timmins, Ontario.
It has also launched a wholly-owned subsidiary named Net-Zero Metals with the goal to ensure nickel supply with a net-zero carbon footprint, making it an appealing source of this vital battery metal for companies like Tesla.
Thanks to its proximity, the company has the potential to capture the local EV market, which is currently relying on Indonesia and China for this metal.
The Crawford project shows great potential. At its peak, it will be able to produce about 42 kilo tonnes of nickel per annum, which is about half Vale’s annual production from Canada. The total reserves are estimated at over 840 kilo tonnes, and the mine has a 25-year life span.
The stock started trading on the TSX in Feb 2020, so the growth so far has been heavily influenced by the market dynamics rather than demand and supply of nickel. It rose 355% between its Feb 2020 inception and May 2021 peak.
2. Sherritt International Stock
Sherritt mines Nickel and Cobalt, covering two out of three primary battery metals. The company has been operating since 1927 and has emerged as a low-cost nickel producer.
It produces nickel from lateritic sources, i.e., surficial ore, which prevents the need for deep mining. The company mines the nickel from Cuba and refines it in Saskatchewan.
The Moa project in Cuba, in which Sherritt has a partial stake, is a massive nickel production resource and will provide 1.5% of the entire global nickel supply in 2019.
The company already has a robust mining and refining operation and is rapidly expanding its production capacity.
It’s a mature mining stock that has been a shadow of its former self (before 2008) and, since 2015, has mostly traded as a penny stock (below $1).
This allows it to grow at a power pace in favourable market conditions, and it has surged twice in the last three years – over 600% between March 2020 and Feb 2021 and then 100% between Aug 2021 and March 2022.
3. Horizonte Minerals Stock
Horizonte Minerals is a UK-based, cross-listed company developing two nickel mining projects in Brazil. Collectively, these projects are expected to offer a 60-kilo tons per annum production capacity.
It has 100% ownership of both tier 1 mining projects. The area where it’s developing its projects is already home to nickel production giants like Vale and Glencore, which indicates that the supply chains are well-established. It’s expected to start production by mid-2024.
Horizonte Minerals stock has inspired adequate investor confidence as a sizeable nickel producer. The stock has seen multiple growth spurts since 2017. The two most prominent ones were: Over 180% between Dec 2018 and Oct 2019 and about 450% between Apr 2020 and Jan 2021.
4. FPX Nickel Stock
FPX Nickel is a Vancouver-based nickel production company developing a project in Canada (central BC). The company has 100% ownership of the Decar nickel district (the project), and the concentrate they are mining is mainly made up of nickel and mining.
But even if it indicates that the company’s natural tilt might be to mine nickel for the stainless-steel industry, it’s also counting on the EV-driven nickel demand for its organic growth.
The project has several inherent benefits, including its production capacity, which is expected to put it among the world’s top-ten largest nickel mining projects.
It also offers low-impurity ore, and the company is focused on keeping its carbon footprint to a minimum.
The stock has been around for well over two decades. It has seen two significant surges, one was after the great recession, and the second was during the post-pandemic market when it rose over 700% (between Dec 2019 and Feb 2021).
5. Nickel 28 Capital Stock
The Toronto-based Nickel 28 focuses on nickel-cobalt royalties, which might be an even more attractive way to gain exposure to the underlying battery metal than investing in mining operations directly.
The company does have an over 8.5% mining interest in Ramu nickel-cobalt operations in Papua New Guinea, in which the majority stakeholder is Metallurgical Corporation of China.
The company also has a portfolio of 13 royalties, most of which are in projects still in the exploration stage.
The Nickel 28 stock is relatively new and listed on the junior exchange at the end of 2019.
Since then, it has mostly gone up, growing about 330% to its 2022 peak. Despite its long-term prospects, thanks to many exploration-stage royalties, Nickel 28 might be a more promising investment than most miners on this list.
6. Talon Metals Stock
Talon Metals is a company created solely for the Minnesota-based Tamarack project that focuses on nickel, cobalt, and copper mining. The company has a 51% stake in the project, and the Brazilian Rio-Tinto owns the rest.
The current indicated resources are pretty optimistic – over 3.9 million tonnes. Nickel makes up about 1.9% of the ore’s composition. The company aims to be a low-cost Nickel producer and primarily cater to the US market.
The performance of the Talon Metals stock in the last five years has been quite impressive. In two different growth phases, it has risen over 360% (between Dec 2017 and July 2019) and over 860% (between Mar 2020 and Feb 2021), respectively.
7. First Quantum Minerals Stock
- Ticker: FM.TO
- Industry Niche: Metal production – mostly copper but also nickel
- Forward Dividend Yield: 0.71%
- Dividend Payout Ratio: 38.14%
- Dividend Yield (12-Month Trailing): 1.15%
- Upcoming Dividend Date: Sep 19, 2023
- Market Cap: $9.23 Billion
- Forward P/E Ratio: 8.07
First Quantum Minerals is the copper production giant in Canada. But the company is also focusing on nickel nowadays.
One of its projects – Ravensthorpe in Western Australia, which is an open-pit mine, is the primary source of the company’s nickel reserves. The company expects to produce between 25 to 30-kilo tonnes of nickel per annum.
The stock is a bit different from most other nickel stocks on this list as another metal, i.e., copper influences its finances and growth potential far more than copper. But it’s still a powerful nickel producer in Canada with a global portfolio of assets, making it a compelling cyclical stock.
8. Lundin Mining Stock
- Ticker: LUN.TO
- Industry Niche: Metal production – Copper, nickel, zinc, etc.
- Forward Dividend Yield: 4.17%
- Dividend Payout Ratio: 60.84%
- Dividend Yield (12-Month Trailing): 2.85%
- Upcoming Dividend Date: Dec 13, 2023
- Market Cap: $7.26 Billion
- Forward P/E Ratio: 15.39
Lundin Mining is another copper-heavy stock on this list. Well over two-thirds of its metal production and sales are comprised of copper, but about 11% come from nickel as well.
One of its six projects, Eagle in the US, is responsible for the company’s nickel production.
The project is not as nickel-rich as most of the development stage projects of other companies on this list, but the company is already producing and selling nickel.
It is more likely to get a boost if a significant supply crunch happens. The stock has mostly been cyclical and offers healthy dividends at a decent yield.
9. Garibaldi Resources Stock
Garibaldi Resources is focused on exploring nickel-rich resources for development and production. So far, the company has projects in two countries, Canada and Mexico.
The local projects are concentrated in BC, and the company has 100% ownership of all five projects. But only one of the five projects is nickel focused. None of its Mexican projects are Nickel-oriented.
American Nickel Stocks
Apart from these best nickel stocks in Canada, there are two foreign stocks that you may consider investing in:
10. Vale SA Stock
- Ticker: VALE
- Industry Niche: Mining company
- Forward Dividend Yield: 5.93%
- Dividend Payout Ratio: 44.84%
- Dividend Yield (12-Month Trailing): 10.02%
- Upcoming Dividend Date: Dec 08, 2023
- Market Cap: $65.20 Billion
- Forward P/E Ratio: 6.17
The Brazilian Vale is one of the world’s largest mining companies and operates in 30 countries. It’s also the biggest global producer of iron ore and nickel.
Its nickel mining operations are in Canada, Indonesia, and Brazil, with Canada being the largest source of its nickel production. The stock is cyclical in nature and comes with a compelling dividend yield.
11. Glencore Stock
- Ticker: GLNCY
- Industry Niche: Commodity trading and company
- Forward Dividend Yield: 9.90%
- Dividend Payout Ratio: 46.05%
- Dividend Yield (12-Month Trailing): 3.93%
- Upcoming Dividend Date: Oct 06, 2023
- Market Cap: $69.03 Billion
UK-based Glencore is one of the largest natural resource companies in the world. It’s the largest nickel producer in Canada and is famous for the purity of its nickel, making it ideal for EV batteries.
It also has assets in Australia and Europe. The company produces and markets nickel for other companies, making its portfolio relatively diverse.
The stock offers powerful growth potential and is capable of 3x growth in a three-to-four-year period.
Who Is The Largest Producer Of Nickel In Canada?
Glencore and Vale are two of the largest nickel producers in Canada. As per 2021’s production numbers, Glencore is the largest nickel producer in Canada.
Sustainability and Social Impact of Nickel Mining
Nickel mining, like other forms of mining, has significant environmental and social impacts. Here’s a look at some of these concerns and how the industry is addressing them:
- Environmental Degradation: Traditional nickel mining can result in habitat destruction, soil and water contamination, and other environmental challenges. Mining companies are increasingly investing in technologies and practices to minimize these impacts.
- Carbon Emissions: As the world moves towards a greener future, mining operations’ carbon footprints come under scrutiny. Companies such as Canada Nickel, with its Net-Zero Metals initiative, are aiming to ensure a net-zero carbon footprint, aligning with global sustainability goals.
- Water Usage: Mining operations often require significant water resources, which can strain local ecosystems. Leading mining companies are now focusing on water recycling and more efficient water use to mitigate these concerns.
- Community Relations: Mines often operate in or near indigenous lands or local communities. Ensuring that these communities benefit from mining activities, through job opportunities or community development projects, is essential for sustainable operations.
- Rehabilitation Efforts: Once a mine’s operational life is over, restoring the site is crucial. Modern mining companies are bound by regulations to ensure land rehabilitation, restoring mined areas to their natural state or repurposing them for community benefits.
- Supply Chain Ethics: As the demand for nickel rises, especially from the EV industry, ensuring ethical sourcing becomes paramount. Companies are increasingly adopting transparent sourcing practices, ensuring that nickel is sourced without compromising environmental or human rights standards.
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The best nickel stocks in Canada are an intelligent way to add this potentially explosive metal commodity to your portfolio.
But it’s essential to consider the timeline of the companies you are investing because if the global supply becomes saturated before the discovery and development stage of nickel companies start producing, the stocks may become liabilities.
If you are interested in investing in EVs directly, these EV companies should be on your radar.