Why is the Nickel Industries share price dipping on Wednesday?

The Nickel Industries Ltd (ASX: NIC) share price is falling wayside during trade on Wednesday morning.

This comes after the company announced a long-term strategic cooperation agreement with PT QMB New Energy Materials (QMB).

At the time of writing, the nickel producer’s shares are down 1.4% to 88.3 cents.

Nickel Industries secures long-term contract

The dip in the Nickel Industries share price appears to be coming from a broader sell-down across the ASX today. Wall Street recorded losses overnight as the United States Federal Reserve looks all but certain to lift interest rates by 75 basis points tomorrow.

In today’s release, Nickel Industries advised that it will supply 5 to 7 million wet metric tonnes per annum of limonite ore to QMB’s upcoming concentrator plant.

Subject to necessary approvals, QMB will build the concentrator plant within the Hengjaya Mine area. This will allow ore to flow through a pipeline to its newly commissioned high pressure acid leach (HPAL) plant.

The agreement between the parties will run for 20 years.

In addition, the agreement allows for the exploration of an option for Nickel Industries to take equity participation in the QMB HPAL plant.

If executed, this could see the company produce nickel and cobalt for the growing electric vehicle battery supply chain.

However, discussion on the finer details regarding the long-term agreement must take place. This will include the sale price for limonite ore.

Nickel Industries’ managing director, Justin Werner commented:

We are pleased to announce the signing of a long-term strategic cooperation agreement with QMB, a leading global new energy material company. The long-term supply agreement to the QMB HPAL plant highlights the tremendous strategic value of the world-class Hengjaya Mine resources, both limonite and saprolite. It follows our recently updated JORC resource of 3.7 million tonnes of contained nickel metal, which places the Hengjaya Mine among the top 10 nickel resources globally.

Nickel Industries share price snapshot

After reaching an all-time high of US$43,000 per tonne in mid-March, nickel is now fetching US$24,000 per tonne.

Subsequently, this impacted the Nickel Industries share price. It fell to a 52-week low of 84.5 cents on 7 September.

Year to date, the company’s shares are down 38.3%.

Nickel Industries has a price-to-earnings (P/E) ratio of 8.97 and commands a market capitalisation of approximately $2.44 billion.

The post Why is the Nickel Industries share price dipping on Wednesday? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• 3 ASX 200 mining shares going great guns on Monday
• Why A2 Milk, BHP, Lovisa, and Nickel Industries shares are charging higher
• Here’s why the Nickel Industries share price is racing 7% higher

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/ospPU9H