Key Takeaways
- 01 A US$245 million loan for the ENC HPAL Project has now been signed, with OCBC leading the banks, and the lenders cannot claim against Nickel Industries
- 02 Nickel Industries holds 46% of the Project and does not consolidate it, so the loan does not add to group debt
- 03 Other banks may join, and the loan could grow to US$800 million, but neither has been confirmed
Nickel Industries Limited (ASX: NIC) has secured a US$245 million non-recourse facility for the ENC HPAL Project in Indonesia. PT Fajar Metal Industry (FMI) signed the deal. Oversea-Chinese Banking Corporation Limited (OCBC) arranged and led it. The Company announced the signing on 21 Oct 2026.
For anyone following Nickel Industries financing, the key point is simple. The debt sits at project level, not inside the Company’s group debt.
The timing stands out. The Company says it secured the facility despite a tough 2026 for the HPAL sector. Sulphur supply disruption tied to the Middle East conflict hit the sector. El Niño drought conditions added pressure.
OCBC Leads a US$245 Million Facility Over the ENC HPAL Project
FMI is the Indonesian operating company that owns the Project inside the Indonesia Morowali Industrial Park. The ENC joint venture owns FMI outright. Nickel Industries holds a 46% interest in that venture.
The facility has two parts. A term loan carries most of the funding, and a smaller working capital line makes up the rest.
| Component | Amount | Note |
|---|---|---|
| Amortising term loan | US$220 million | Main funding component |
| Working capital facility | US$25 million | Smaller component |
| Total facility | US$245 million | Non-recourse to Nickel Industries |
| Accordion feature | Up to US$800 million | Potential increase to the term loan |
Pricing, Tenor and Covenants Define the Debt Package
- Tenor: Seven years from first drawdown.
- Pricing: A margin of 2.00% per annum above the Secured Overnight Financing Rate (SOFR).
- Security: Secured over FMI’s project assets, with no recourse to Nickel Industries.
- Covenants: Customary for this type of financing, including a maximum net debt to EBITDA ratio of 3.0x.
- Drawdown: Subject to customary conditions precedent.
Equity Accounting Keeps the Facility Away From Group Debt
Distribution Route Puts Cash Toward the Company
The facility allows FMI to distribute term loan proceeds to its shareholders. Nickel Industries will receive its 46% share of any distribution. The Company plans to use that money for general corporate purposes.
Existing Group Covenants Stay Unchanged
Nickel Industries equity accounts for its 46% interest in the Project. As a result, the facility is not consolidated into group debt. The Company says its existing group financial covenants are not affected.
Managing Director Justin Werner Ties the Deal to Asset Quality
Managing Director Justin Werner thanked OCBC for leading the financing and for its ongoing support. He said winning non-recourse funding in a hard year for HPAL speaks to the asset and its partners.
Werner also said the facility backs ENC’s funding as output builds toward nameplate capacity. Group debt does not rise.
From Nickel Pig Iron to Battery Materials: How the Company Reached ENC
Nickel Industries owns mining and downstream nickel processing assets in Indonesia. It holds controlling interests in the Hengjaya Mine and four rotary kiln electric furnace projects. Those projects produce nickel pig iron for stainless steel.
Figure 1: A pile of raw nickel ore, the feedstock behind HPAL processing [Courtesy: Nickel Industries Limited]
The Company has since moved toward the electric vehicle battery supply chain. A 10% interest in the Huayue Nickel Cobalt HPAL project adds mixed hydroxide precipitate to its products. The Company says ENC is now in commissioning and is expected to produce more than 72,000 tonnes of nickel metal per annum.
Share Price Sits Close to the 52-Week Low
| Metric | Data |
|---|---|
| Last price | A$0.680 per share |
| Market capitalisation | A$2.93 billion |
| 52-week low | A$0.660 per share |
| 52-week high | A$1.125 per share |
Sulphur, Drought and Drawdown Conditions Keep Risk in View
- Sulphur supply: Disruption linked to the Middle East conflict hit the HPAL sector in 2026.
- Weather: El Niño drought conditions also affected the sector.
- Drawdown: It remains subject to customary conditions precedent.
- Lenders: FMI is still talking to other banks, and no further lenders are confirmed.
- Ramp-up: ENC is still commissioning and building toward nameplate capacity.
Further Lenders and Drawdown Will Shape the Next Phase
This Nickel Industries project update contains one confirmed next step. FMI continues to discuss participation with other banks on the same terms. The Company will update the market if more lenders join.
The impact falls in three places. ENC’s funding position strengthens as it ramps up. The Company’s group debt does not change. Nickel Industries receives 46% of any distribution.
An accordion feature could lift the term loan up to US$800 million. That remains a possibility, not a commitment. Mining Herald will track any new lenders and the first drawdown.
FAQs
Q1: What did Nickel Industries announce on 21 Oct 2026?
Ans: FMI signed a US$245 million non-recourse facility for the ENC HPAL Project, led by OCBC.
Q2: Does the facility add to Nickel Industries group debt?
Ans: No. The Company equity accounts for its 46% interest, so the facility is not consolidated.
Q3: What are the main terms?
Ans: A seven-year tenor, a 2.00% margin above SOFR and a maximum net debt to EBITDA ratio of 3.0x.
Q4: Could the facility grow?
Ans: Possibly. An accordion feature allows the term loan to rise up to US$800 million.
Disclaimer
This article is intended for informational purposes only. If you pay attention to the nickel and battery metals sector as an investor, then all the data in the content is from third-party sources. Please check out the complete share price and market data info. Investing carries a high risk, and you should only invest at your own risk. Mining Herald has no involvement in the above-listed companies.
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About the author
Jonathon Brown
Jonathon Brown began his career as a broadcaster, working across markets in British Columbia before moving into financial journalism. Since 2017, he has specialised in stock market reporting, covering emerging companies across the healthcare, technology, mining and consumer sectors. He brings more than 15 years' experience to his reporting. A graduate of Vancouver Island University and the British Columbia Institute of Technology, Jonathon is focused on delivering clear, balanced reporting for investors.
