Nickel Industries' H1 2026: NPI Leverage and the Dawn of the HPAL Era
Nickel Industries Limited reported a standout H1 2026, delivering adjusted EBITDA of USD 247.6 million, up 46% year-over-year, with the NPI business more than doubling its EBITDA per tonne. The company is now two quarters into a strategic inflection: the ENC HPAL complex is commissioning, Sampala's resource has been upgraded to over a billion wet tonnes, and management has articulated a clear path to USD 1 billion in EBITDA within 2–3 years. After years of navigating depressed nickel prices, tight cash flow, and an overhang of project funding, the company is finally seeing the operating leverage that its integrated model was designed to deliver.
NPI Leverage: The 21/87 Rule
The core of the beat is the strength in nickel pig iron (NPI) prices. Average NPI prices rose 21% year-over-year to $13,784 per tonne, while NPI adjusted EBITDA jumped 87% to $146.7 million. As Managing Director Justin Werner put it, “So we've got a 21% increase in the NPI price, an 87% increase in adjusted EBITDA.” — Justin Werner, Managing Director · 2026-08-25 That kind of operating leverage is possible only because the company sits at the bottom of the cost curve, a position reinforced by its cost curve advantage and integration across mine, RKEF, and now HPAL. The mining business also showed a step-change in margins: adjusted EBITDA per wet metric tonne reached $15.90 in June, up from $12.40 for the half, helped by the new HPM price regime and a stronger RKAB quota of 14.3 million tonnes for 2026. Notably, the company has applied to lift that further to 19 million tonnes, which would cement self-sufficiency across all downstream operations.
ENC: The HPAL Transformation Is Real
The most significant milestone this half was the commissioning of ENC, the company's 46%-owned HPAL project. First MHP production and first cathode both arrived ahead of schedule, and quality is reportedly excellent. The cathode will ultimately feed SpaceX through the Sphere offtake and is targeted for LME registration, which could command a premium. However, the ramp is not without friction: a dry season and water availability are pacing the third autoclave, and the company is awaiting an IUI sales license to monetize the product. Despite these, management remains confident of reaching nameplate by year-end. This marks a shift from prior quarters, when the market worried about cash absorption. In the 2025-07-30 call, CFO Chris Shepherd described the deliberate decision to defer working capital ahead of the sales license: “We haven't released obviously full numbers on that, [ Chun, ] that's not public, but it was significant enough for us to take that decision to not build up that working capital for 2, 3, 4 months ahead of the sales license.” — Christopher Leslie Shepherd, CFO or Finance Executive · 2025-07-30 Today, the company holds $260 million cash and has executed a $169 million facility from a Tsingshan partner to backstop the TMI payment due in November, removing any near-term funding overhang.
One Billion by 2028: The Blueprint
Management broke down the USD 1 billion EBITDA target into three buckets: roughly $300 million from NPI, $225 million from Hengjaya Mine at current margins, and $480 million from 60,000 tonnes of attributable HPAL (ENC, CNE, TMI), plus an incremental $300 million from Sampala at a 20-million-tonne run rate. While those numbers rely on sustained nickel prices, the company has de-risked the HPAL expansion via a zero-cash share swap for a 36% interest in the CNE project, and the Sampala resource now stands at over 1 billion wet metric tonnes, one of the largest globally. Werner emphasized the structural supply deficit:
This is a stark contrast to the 2025-04-29 call, where the company was still navigating the path to the expanded RKAB: “At the moment, we have over 20 million tonnes of Limonite currently stockpiled. So that there is more than enough Limonite stockpiled to make that ramp up from 9 million to 19 million.” — Justin Werner, Chief Executive Officer · 2025-04-29 That stockpile is now feeding ENC and third parties, and the company is executing the ramp it long promised.we're looking forward to increased volumes and significantly stronger margins and also a very strong focus on bringing on Sampala next year into production. And we think this growth, when you combine the incremental HPAL product margins that will come on over the course of the next 12 to 18 months, along with margins from Sampala at a 19 million to 20 million tonne run rate, that sets us up well to targeting EBITDA of USD 1 billion in the next sort of 2 to 3 years.
What's New: Cathode and the Share-Swap Strategy
The biggest conceptual shift is the emergence of nickel cathode as a revenue stream, tying the company directly to the aerospace and defense supply chain via Sphere. Combined with the share swap for CNE and the TMI investment, NIC is building a portfolio of high-margin MHP and cathode units at a capital intensity (~$10,000/t) far below market norms. These are company-unique catalysts, not sector-wide tailwinds, and they have materially reshaped the earnings trajectory. The market may not yet be pricing this optionality, but the fundamental backdrop—strong NPI demand from stainless growth, a cap on Indonesian supply, and 1.1 million tonnes of incremental nickel demand by 2030—is turning in the company's favor. As Werner concluded, the company is positioned at the bottom of the cost curve and is finally seeing the payoff from years of integration. With the NPI business as the cash engine and HPAL as the growth engine, Nickel Industries is no longer a turnaround story; it is a re-rating candidate.