Financial Recovery is Possible After Nickel Price Rebound
Watch the video with Andrew Stotz or read a summary of the World Class Benchmarking on Nickel Asia Corporation.
Background
Nickel Asia Corporation (NIKL) is one of the world’s top suppliers of lateritic nickel ore.
The company has four mines, Rio Tuba, Taganito, Cagdianao and Taganaan, and seven exploratory sites, including for gold and copper, in the Philippines. Besides the Philippines, ore is shipped to Japan, China and Australia.
Business Description
NIKL’s business is the mining of lateritic nickel ore, a key component in the manufacture of stainless steel, which accounts for around two-thirds of the ore’s use. Stainless steel uses nickel’s heat-resistant and anti-corrosive properties.
The company divides the sold nickel ore into saprolite, which has an iron content of less than 20%, and limonite which as an iron content of 20% or more. Limonite accounted for 64% of the sold volume in 2015 but only 37% of revenue.
In addition to the company’s four existing mines in the Philippines, it has eight exploratory sites. These sites include four gold and copper mines, as NIKL seeks to diversify sources of revenue. In the end of 2015, the company acquired a fifth nickel site which is under development to improve the mine’s production standards.
The company has also ventured into renewable energy and power generation through its 66%-owned subsidiary Emerging Power Inc. which focuses on solar, wind and geothermal power generation. This segment had not started to contribute any revenue as of 2015.
Leadership
Manuel Zamora, Jr. is the Chairman and founder of Nickel Asia Corporation. He is a lawyer and received his Bachelor of Science degree from the University of the Philippines.
Gerard Brimo is the President and Chief Executive Officer of the company. He is also the president of two privately owned exploration companies, Newminco Nickel Mining Corp. and Newminco Pacific Mining Corp. Mr. Brimo has long experience from the mining business, his career began with Philex Mining as a vice president in 1985.
World Class Benchmarking
Profitable Growth has been falling since 2014. This means Nickel Asia Corporation only ranks better than companies 279 of 930 medium Materials comps.
Nickel prices have fallen almost 50% from its 2014 peak, which certainly has a strong impact on the company’s performance. But do keep in mind that many companies in the Materials sector have faced low commodity prices. Nickel prices have started to turn in 2016, up about 25% year to date.
Profitability has fallen as well, Growth is almost ranked worst since 2015.
Profit margin is average, while efficiency is low. Sales growth and Margin change are ranked worst.
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