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2023 Report ANNUAL REPORT
2023
NICKEL INDUSTRIES
and its controlled entities
ABN 44 127 510 589
Contents
Chairman’s Letter
Review of Operations
Corporate Governance Statement
Directors’ Report
Lead Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional ASX Information
Corporate Directory
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Nickel Industries Annual Report 2023
Dear Fellow Shareholders,
It is with great pleasure I present to you
the Nickel Industries Limited Annual
Report for the financial year ended
31 December 2023.
The 2023 financial year was one of tremendous progress
for our Company as we continued to transition our business
further into the production of class 1 nickel suitable for use
in the EV battery supply chain. Having already established
ourselves as a leading global producer of NPI we began our
transition into battery-grade nickel intermediates in late
2022 with the conversion our Hengjaya Nickel’s Project’s
production from NPI to nickel matte.
In early 2023 we continued this transition with the
execution of a multi-faceted strategic framework
agreement with our trusted partner Shanghai Decent
to acquire a minority 10% interest in the Huayue Nickel
Cobalt high pressure acid leach (HPAL) project (HNC),
and also to become the cornerstone investor in a new
“next generation” HPAL project to be known as the
Excelsior Nickel Cobalt project (ENC). ENC will be capable
of producing mixed hydroxide precipitate (MHP), nickel
sulphate and nickel cathode, resulting in us having an
expanded product offering covering the full spectrum of
nickel products. This production flexibility will establish
NIC as truly diversified global nickel producer and allow
us to capitalise on prevailing pricing conditions across the
various nickel markets. Furthermore, it will position the
Company as a global top-5 nickel producer, a remarkable
feat given we started with our initial two RKEF lines at
Hengjaya Nickel in 2019.
ENC will deliver the benefit of significantly reducing our
carbon footprint across our portfolio of downstream
processing assets, with the project’s primary energy
requirements to be sourced from heat generation from
a sulphuric acid plant and the integration of renewable
energy. Our recognition as a leader in responsible and
sustainable mining in Indonesia has continued to gain
momentum, evidenced by the Hengjaya Mine once again
being award a Green PROPER Rating and the Company
being invited to present at the United Nations Climate
Change Conference (COP28) in the United Arab Emirates
in December, where we unveiled our future emission
targets of a 50% reduction in carbon intensity by 2035 and
net zero emissions by 2050.
Another major milestone achieved during the year was
the opening of the Hengjaya Mine to IMIP haul road. This
road is set to be transformative for the Company’s mining
operations in the years ahead, allowing significantly larger
volumes of ore to be trucked and sold into the IMIP at
lower costs and thereby unlocking the strategic value of
Hengjaya Mine. With ore mining volumes set to surpass
10M wmt in 2024 and targeting 25M wmt within 3 years,
we look forward to Hengjaya Mine making an increasingly
significant contribution to our overall Group result.
Chairman’s Letter
On the corporate front, we were pleased to announce
several exciting developments that undoubtedly
strengthened the foundation of our Company. We
were delighted to welcome United Tractors (UT), a
Jardine Matheson subsidiary, as a new 19.99% strategic
shareholder, a company whose long established operating
track record and deep connections into Indonesia’s
industrial supply chains makes it a tier-1 partner for NIC.
UT’s A$943M cash injection into our Company further
strengthened our robust balance sheet and paved the
way for the Company to establish a maiden US$400M
financing facility with Indonesia’s PT Bank Negara (BNI), a
sign of our growing in-country reputation and status.
During the year we farewelled three non-Executive
Directors from the Company’s Board with Rob Neale
(Chairman), Huang Weifeng and Mark Lochtenberg,
all retiring. I would like to personally thank all three
gentlemen for their enormous contribution to our
Company over a number of years and would particularly
like to thank Mr. Huang for the crucial role he has played
in fostering the prosperous and harmonious relationship
we have enjoyed with Shanghai Decent and the broader
Tsingshan group since our collaboration began back
in 2017.
Finally, I would again like to thank our management
team led by Managing Director Justin Werner for their
continuing hard work and dedication to growing and
improving all facets of our business and making us the
world-class nickel business that we are today. Despite
recent market turbulence, we have great confidence
in the outlook for our business as evidenced by our
commitment to increasing our 2023 Final Dividend to
2.5cps and announcing capital management initiatives
that will allow enhanced returns to you our valued
shareholders.
Yours sincerely
Norman Seckold
Executive Chairman
Annual Report 2023 Nickel Industries
1
Review of Operations
PRINCIPAL ACTIVITIES AND REVIEW OF OPERATIONS
(All amounts in US$ unless otherwise stated)
The operating profit of Nickel Industries Limited and
its controlled entities (together the Group) for the
year ended 31 December 2023 after income tax was
$176,203,376 (31 December 2022: $209,367,610).
Nickel Industries Limited (the Company or Nickel
Industries) was incorporated on 12 September 2007,
under the laws of the State of New South Wales, Australia.
The Group has become a globally significant, low cost
producer of nickel pig iron (NPI), a key ingredient in the
production of stainless steel. Additionally, the Group
has moved into the production of nickel matte and
acquired interests in high pressure acid leach (HPAL)
projects, producing mixed hydroxide precipitate (MHP)
for use in the electric vehicle (EV) supply chain. The
Group’s principal operations, located in Indonesia, are
the Hengjaya Nickel, Oracle Nickel and Ranger Nickel
rotary kiln electric furnace (RKEF) projects located
within the Indonesia Morowali Industrial Park (IMIP), the
Angel Nickel RKEF Project within the Indonesia Weda
Bay Industrial Park (IWIP) and the Hengjaya Mine, a
large tonnage, high grade nickel laterite deposit in close
proximity to the IMIP. At year end, the Company held
an 80% interest in each of the Angel Nickel, Hengjaya
Nickel, Oracle Nickel and Ranger Nickel projects and
the Hengjaya Mine, a 10% interest in the Huayue Nickel
Cobalt HPAL project (HNC) and a 13.75% interest in the
Excelsior Nickel HPAL project (ENC).
During the year ended 31 December 2023 significant
milestones were achieved as follows:
•
the Company’s RKEF projects produced a record
128,259 tonnes of nickel metal, 107,720 tonnes of
nickel metal in NPI and 20,539 tonnes of nickel metal
in nickel matte. A total of 128,327 tonnes of nickel
metal were sold by the RKEF projects during the year.
EBITDA1 from RKEF operations for 2023 was a record
$337.2M;
• commercial sales of NPI commenced at the Oracle
Nickel RKEF project, following commissioning of the
RKEF lines and power plant. The 380MW power plant
at Oracle Nickel commissioned in late June 2023;
•
13,401,289 wet metric tonnes (wmt) of nickel ore
were mined at the Hengjaya Mine, 3,832,833 wmt
of saprolite ore and 9,568,456 wmt of limonite ore.
EBITDA from the Hengjaya Mine for the year was
$87.9M2;
• on 18 January 2023, the Company signed an EV
Battery Supply Chain Strategic Framework Agreement
with Shanghai Decent and entered into binding
agreements with Shanghai Decent to acquire an
additional 10% interest in the Oracle Nickel project
and a 10% interest in HNC. Additionally, the Company
acquired options to collaborate with Shanghai
Decent on future battery nickel opportunities for
$40M (Acquired Options). The Acquired Options
comprised: (i) a $25M option for the construction
•
•
•
•
•
•
•
•
•
•
of the ENC project (which option has subsequently
been executed); and (ii) a $15M option to invest in
and construct a low-grade to high-grade nickel matte
converter at Oracle Nickel;
to fund these transactions, the Company undertook
an institutional placement issuing 259,103,641 shares
to complete component of the raising at A$1.02 per
share, raising A$264.3M ($185.7M), before costs and a
Share Purchase Plan raising A$34.6M ($23.4M);
in February 2023, the Company declared a final
dividend for 2022 of A$0.02 per share, representing a
distribution of A$60.5M ($40.7M), and in August 2023
the Company paid an interim dividend of A$0.02 per
share, being a distribution of A$68.6M ($44.9M);
from mid-August 2023 to 31 December 2023, HNC
produced 28,679 tonnes of nickel and 2,100 tonnes of
cobalt in MHP, with the Company’s share of this being
10%;
in April 2023, the Company completed a $400M
issuance of senior unsecured notes, the refinancing
of the Company’s $225M senior secured notes and
completion of a Concurrent Tender Offer for the
existing $325M senior unsecured notes maturing in
April 2024;
in August 2023, the Company completed a $270M
Placement to Shanghai Decent at A$1.02 per share
for a 10% interest in HNC and acquired an additional
10% of Oracle Nickel for $75M in cash (plus a retained
earnings adjustment of $1.5M), and also paid $40M for
the Acquired Options;
in August 2023, the haul road and double lane bridge
linking the Hengjaya Mine to the IMIP was completed,
enabling the Hengjaya Mine to rapidly expand total ore
sales;
in September 2023, following shareholder approval,
the Company completed a A$943M ($628M)
placement of shares at A$1.10 per share in the
Company to PT Danusa Tambang Nusantara (DTN), a
subsidiary of PT United Tractors Tbk (United Tractors);
in October 2023, the Company made a positive
final investment decision (FID) for ENC, supported
by US$400M of Indonesian bank loans. As at 31
December 2023, the Company had completed the
acquisition of a 13.75% indirect equity interest in ENC;
in October 2023, the Company signed an Operational
Lease and Service Agreement (OLSA) with PT Sumber
Energi Surya Nusantara (SESNA) for the development,
installation, operation and maintenance of a 200MWp
+ 20MWh battery solar project within the IMIP; and
throughout the year, the Company has advanced a
number of material resource acquisitions in Indonesia,
including the Siduarsi project in the Papua Province.
The Company anticipates the conclusion of the
acquisitions for a number of resource projects in 2024.
1
2
EBITDA is defined as profit/(loss) for the period, plus depreciation and amortisation costs, plus interest income/(expenses), plus withholding
tax expense. This non-IFRS financial measure, which is referred to throughout the Directors’ Report, is used internally by management to
assess the performance of the Group’s business and make decisions on allocation of resources. This non-IFRS measure has not been subject
to audit or review.
During the year, the Hengjaya Mine sold saprolite ore to Hengjaya Nickel, Oracle Nickel and Ranger Nickel. Hengjaya Mine profit of $3.4M
relating to nickel ore inventory still held by Hengjaya Nickel, Oracle Nickel and Ranger Nickel at 31 December 2023 is eliminated on
consolidation. On a stand-alone basis, EBITDA from the Hengjaya Mine was $91.3M.
2
Nickel Industries Annual Report 2023
Review of Operations
SAFETY
Hengjaya Mine
At the Hengjaya Mine over 10.17 million work hours have
been registered since the last reported lost time injuries
(LTI) in November 2021. This gives the Hengjaya Mine a
LTI frequency rate (LTIFR) of 0.10 and a total recordable
incident frequency rate (TRIFR) of 0.98 for each million
work hours.
Safety and career development training continued,
including supervisory and ISO 45001-2018 standards and
reporting components which are currently focusing on
Health and Safety certification. With the new haul road to
IMIP now in operation, there has been an increased focus
on contractor management, the use of mobile equipment
and the introduction of new safe work procedures for long
distance road-haulage.
RKEF Operations
For the twelve months to 31 December 2023, 11,144,676
cumulative work hours without an LTI were achieved
across Nickel Industries’ RKEF operations.
Group Safety
16,718,448 LTI-free man hours across all of Nickel
Industries’ projects were achieved in 2023. The Company
will continue to strengthen its ‘best practice’ mining and
all processing standards. In addition to the Hengjaya
Mine, all of our operations continue to focus on our safety
training, risk assessments and change management. The
Company remains committed to continuous improvement
in all operations and will continue to work collaboratively
with stakeholders to drive positive environmental, safety,
social, and governance outcomes.
Annual Report 2023 Nickel Industries
3
Review of Operations
RKEF OPERATIONS
Throughout 2023 Nickel Industries held an 80% interest in the Hengjaya Nickel, Ranger Nickel and Angel Nickel RKEF
projects and in August 2023 increased from a 70% to an 80% interest in the Oracle Nickel RKEF project.
A summary of NPI production from the four RKEF projects for the year ended 31 December 2023 is as follows:
PRODUCTION
NPI production
NPI grade
Nickel in NPI
LG matte production
Matte grade
Nickel in LG matte
Total nickel production
HNI
RNI
ANI
ONI
Total
tonnes
%
tonnes
tonnes
%
tonnes
tonnes
-
-
-
119,822
17.1
20,539
20,539
154,802
339,905
339,485
834,192
12.6
14.4
11.5
19,550
49,058
39,112
-
-
-
-
-
-
-
-
-
12.9
107,720
119,822
17.1
20,539
19,550
49,058
39,112
128,259
SALES AND CONTRACTS
HNI
RNI
ANI
ONI
Total
Weighted av contract price
Tonnes sold
Sales revenue
$
tonnes
$M
15,632
19,907
320.2
13,809
19,550
271.9
14,027
49,011
688.0
13,311
39,859
530.6
14,021
128,327
1,810.7
COSTS AND MARGINS
HNI
RNI
ANI
ONI
Total
Cash costs/tonne produced3
EBITDA
$/t
$/M
12,632
50.2
12,562
25.0
10,472
179.5
11,289
82.5
11,385
337.2
SUMMARY RKEF METRICS
Nickel production
Nickel tonnes sold
Nickel metal production attributable to Nickel
Industries
Sales revenue
EBITDA
2022
2023
%
movement
tonnes
tonnes
70,079
67,701
128,259
128,327
tonnes
55,993
100,496
$M
$M
1,202.4
298.7
1,810.7
337.2
83.0
89.5
79.5
50.6
12.9
3
Cash costs refers to the cash costs of production, a non-IFRS performance measure, in order to provide investors with information about
the measure used by management to monitor performance. Cash costs/tonne produced are equal to cash costs divided by nickel tonnes
produced.
4
Nickel Industries Annual Report 2023
Review of Operations
Hengjaya Nickel
(80% interest held by Nickel Industries)
During the year, Hengjaya Nickel produced 20,539 tonnes of nickel metal in low grade (LG) matte, with an average LG
matte grade of 17.1% and a weighted average cash cost of $12,632 per tonne of nickel metal.
HENGAYA NICKEL
Mar 2023
Quarter
Jun 2023
Quarter
Sep 2023
Quarter
Dec 2023
Quarter
Total
LG matte production
tonnes
26,922
LG matte grade
Nickel metal production
Cash cost
Nickel metal sold
%
tonnes
$/t Ni
tonnes
18.8
5,060
14,880
4,638
28,624
17.8
5,104
13,146
4,723
31,618
16.7
5,291
11,379
5,285
32,658
119,822
15.6
5,083
11,184
5,261
17.1
20,539
12,632
19,907
For the year ended 31 December 2023, Hengjaya Nickel recorded total sales of $320.2M from 19,907 tonnes of nickel
metal sold. EBITDA for Hengjaya Nickel for the year was $50.2M.
Ranger Nickel
(80% interest held by Nickel Industries)
During the year, Ranger Nickel produced 19,550 tonnes of nickel metal in NPI, with an average NPI grade of 12.6% at a
weighted average cash cost of $12,562/tonne of nickel metal.
RANGER NICKEL
Mar 2023
Quarter
Jun 2023
Quarter
Sep 2023
Quarter
Dec 2023
Quarter
Total
NPI production
tonnes
37,074
NPI grade
Nickel metal production
Cash cost
Nickel metal sold
%
tonnes
$/t Ni
tonnes
12.8
4,750
15,161
4,750
37,823
12.9
4,891
13,005
4,891
38,659
12.9
4,973
11,242
4,973
41,246
154,802
12.0
4,936
10,952
4,936
12.6
19,550
12,562
19,550
Nickel Industries’ attributable nickel metal production from Ranger Nickel for the year ended 31 December 2023 was
15,640 tonnes.
For the year ended 31 December 2023, Ranger Nickel recorded sales of $271.9M for 19,550 tonnes of nickel metal sold.
EBITDA for Ranger Nickel for the year was $25.0M.
Annual Report 2023 Nickel Industries
5
Review of Operations
Angel Nickel
(80% interest held by Nickel Industries)
During the year, Angel Nickel produced 49,058 tonnes of nickel metal in NPI, with an average NPI grade of 14.4% at a
weighted average cash cost of $10,472/tonne of nickel metal.
ANGEL NICKEL
NPI production
NPI grade
Nickel metal production
Cash cost
Nickel metal sold
Mar 2023
Quarter
Jun 2023
Quarter
Sep 2023
Quarter
Dec 2023
Quarter
Total
tonnes
%
tonnes
$/t Ni
tonnes
80,909
15.3
12,382
11,888
12,479
84,785
14.7
12,422
10,907
12,062
92,050
13.2
12,127
9,467
12,544
82,162
339,905
14.8
12,127
9,587
11,926
14.4
49,058
10,472
49,011
Nickel Industries’ attributable nickel metal production from Angel Nickel for the year ended 31 December 2023 was
39,247 tonnes.
For the year ended 31 December 2023, Angel Nickel recorded sales of $688.0M for 49,011 tonnes of nickel metal sold.
EBITDA for Angel Nickel for the year was $179.5M.
Oracle Nickel
(80% interest held by Nickel Industries)
Having commenced production from its first line in November 2022, the commissioning of Oracle Nickel’s remaining
three lines occurred during the first half of 2023, and the power plant commenced commissioning in late June 2023.
In August 2023, following shareholder approval, the Company completed the acquisition of an additional 10% interest in
Oracle Nickel, following payment of $75M to Shanghai Decent, increasing the Company’s interest from 70% to 80%.
During the year, Oracle Nickel produced 39,112 tonnes of nickel metal in NPI, with an average NPI grade of 11.5% at a
weighted average cash cost of $11,289/tonne of nickel metal.
ORACLE NICKEL
Mar 2023
Quarter
Jun 2023
Quarter
Sep 2023
Quarter
Dec 2023
Quarter
Total
NPI production
tonnes
44,401
NPI grade
Nickel metal production
Cash cost
Nickel metal sold
%
tonnes
$/t Ni
tonnes
11.5
5,206
14,605
5,953
89,167
11.4
10,141
12,794
10,141
97,149
11.8
11,461
9,973
11,461
108,768
339,485
11.3
12,304
9,671
12,304
11.5
39,112
11,289
39,859
Nickel Industries’ attributable nickel metal production from Oracle Nickel for the year ended 31 December 2023 was
29,365 tonnes.
For the year ended 31 December 2023, Oracle Nickel recorded sales of $530.6M for 39,859 tonnes of nickel metal sold.
EBITDA for Oracle Nickel for the year was $82.5M.
6
Nickel Industries Annual Report 2023
Review of Operations
The Company’s increasing production profile across
the year as Oracle Nickel continued to ramp-up to full
production helped offset falling realised contract process
and sustain a strong EBITDA profile, at a time where many
global nickel producers were struggling to break even or
had deteriorated into a loss-making position.
The Company’s larger Angel Nickel and Oracle Nickel
Projects, both with their own integrated power clearly
outperformed the earlier Hengjaya Nickel and Ranger
Nickel Project and, despite the falling contract prices,
were able to maintain EBITDA margins above $2,000/t
across each quarter, once Oracle Nickel was in steady
state production.
The Company believes its continued transition into class 1
nickel production will enable it to further optimise margins
for its products and also broaden its customer base,
both of which are expected to deliver tangible long-term
benefits for the business.
Commentary on RKEF Operations
The Company’s RKEF operations delivered record
production of 128,258 tonnes of nickel metal equivalent
and record EBITDA of $337.2M for the year ended 31
December 2023. This performance was underpinned by
the following highlights:
•
•
•
the consistent contributions of Hengjaya Nickel and
Ranger Nickel, delivering 20,539 tonnes and 19,550
tonnes of nickel metal respectively for a combined
EBITDA of $75.2M, with matte sales from Hengjaya
Nickel delivering material EBITDA margin benefits
relative to Ranger Nickel;
the outstanding contribution of Angel Nickel,
delivering 49,058 tonnes of nickel metal and $179.5M
of EBITDA with the Project’s performance clearly
validating the Company’s decision to invest in larger,
“next generation” RKEF assets with integrated power
at a time where higher energy costs were negatively
impacting the economics of RKEF lines; and
the successful ramp-up beyond nameplate capacity
of Oracle Nickel, delivering 39,112 tonnes of nickel
metal and $82.5M of EBITDA, with the Project’s
integrated power only reaching full capacity during the
September quarter.
The record EBIDTA of the RKEF operations was achieved
against the backdrop of a deteriorating nickel price
environment across the year, with the LME nickel price
and all nickel intermediate pricing experiencing declines
on concerns of short to medium term oversupply
(predominantly out of Indonesia) combined with softer
demand for electric vehicles, ex-China.
RKEF operations recorded strong quarterly production growth during 2023 driven by the ramp-up of Oracle Nickel
Annual Report 2023 Nickel Industries
7
Review of Operations
HPAL OPERATIONS
Huayue Nickel Cobalt HPAL project
(10% interest held by Nickel Industries)
In August 2023, following shareholder approval at an EGM
held in July 2023, the Company completed the acquisition
of an indirect 10% interest in the Huayue Nickel Cobalt
HPAL project (HNC), through the issuance of 381,365,628
ordinary shares in the Company to a Shanghai Decent
affiliate (Decent Investment International Private Limited),
at an issue price of $1.02. Pursuant to the acquisition
agreement, the Company acquired 100% of the issued
capital of Tsing Creation International Holding Limited
(Tsing Creation) from Newstride Development Limited, an
affiliate of Shanghai Decent. Tsing Creation is the holder
of a direct 10% interest in PT Huayue Nickel Cobalt, the
owner and operator of HNC.
From 16 August 2023 to 31 December 2023, HNC
produced 28,679 tonnes of nickel and 2,100 tonnes of
cobalt in MHP. Nickel Industries’ attributable share of
HNC’s production was 2,868 tonnes of nickel and 210
tonnes of cobalt.
Whilst HNC undertakes its own sales of MHP, offtake is
also distributed to Tsing Creation for sale. The combined
EBITDA of the Company’s 100% interest in Tsing Creation
and its 10% indirect interest in HNC for the period from
15 August to 31 December 2023 was $5.2M, comprised
of $7.8M EBITDA contribution from the Company’s 100%
interest in Tsing Creation and a $2.6M loss from the
Company’s 10% loss in an equity accounted investee for
the period4.
View of HNC operations
4
The stand-alone EBITDA of HNC for the period from 15 August 2023 to 31 December 2023 was $14.0M. At a group level the Company is
required to report in EBITDA the profit/loss of an equity accounted investee as EBITDA. This amount includes financing expenses and
amortisation of the fair value step up in the Company’s investment in HNC.
8
Nickel Industries Annual Report 2023
Review of Operations
Excelsior Nickel Cobalt HPAL project
(13.75% interest currently held by Nickel Industries)
During the year the Company executed an acquisition agreement (Acquisition Agreement) to acquire a 55% equity
interest in the Excelsior Nickel Cobalt HPAL project (ENC or the Project) from Decent Resource, through the acquisition
of shares in a Singaporean incorporated holding company, Excelsior International Investment Pte. Ltd (EII), and
shareholder loans (Shareholder Loans) due or owning by EII (and/or its subsidiaries) (ENC Acquisition).
In October 2023, the Company reached a positive final investment decision (FID) with respect to its participation and
investment in ENC, and the ENC Acquisition was approved by shareholders at an Extraordinary General Meeting (EGM)
held on 12 December 2023.
ENC is expected to produce 72,000 metric tons per annum of nickel across the three major class 1 nickel products being
MHP, nickel sulphate and nickel cathode. ENC will be the first HPAL globally with the capacity to produce the three
major class 1 nickel products, all of which are suitable for use in the EV battery market.
Shanghai Decent will once again be providing a “capex guarantee” whereby the total construction costs will not exceed
US$2.3 billion (Capex Guarantee). The Capex Guarantee represents a highly competitive capital intensity compared to
several recently announced projects and advances beyond purely “EPC” costs as it includes Project commissioning and
production build-up to nameplate capacity of at least 60,000 metric tons per annum of contained nickel. Importantly,
the Capex Guarantee includes a tailings facility encompassing industry best practice storage and management (via
dry-stack tailings), and an integrated sulphuric acid plant (which will produce the majority of ENC’s power needs via
renewable energy). Given the recent series of announced capex overruns in the nickel and battery metals industry, the
value of the Capex Guarantee cannot be overstated.
The ability to produce the three major class 1 nickel products (MHP, nickel sulphate and nickel cathode) will:
• provide the Company with significant operating flexibility to target its products for EV battery markets where there
may be significant pricing and demand premiums in the future; and
• significantly diversify the Company’s customer base.
The 55% equity interest in ENC will be acquired over the next two years on the following dates:
Date
US$M
Equity acquired
Cumulative equity
10 business days following shareholder approval - paid
By 1 January 2024 - paid
By 1 April 2024
By 1 October 2024
By 1 July 2025
By 1 October 2025
Total
126.5
189.8
316.3
379.5
126.5
126.5
1,265.0
5.50%
8.25%
13.75%
16.50%
5.50%
5.50%
55.00%
5.50%
13.75%
27.50%
44.00%
49.50%
55.00%
Additionally, the Company initially paid a $25M option for the construction of the ENC project (which was subsequently
executed).
Payment of a refundable deposit of US$126.5M had been made prior to 31 October 2023, which converted following
shareholder approval to a 5.5% equity interest in the Project. Then, in December 2023, the Company paid $189.8M to
increase to a 13.75% equity interest in the Project.
Annual Report 2023 Nickel Industries
9
Review of Operations
HENGJAYA MINE
(80% interest held by Nickel Industries)
The Company holds an 80% interest in PT Hengjaya Mineralindo, the owner of 100% of the Hengjaya Mine, with the
remaining 20% interest owned by the Company’s Indonesian partner.
The mine is located approximately 12 kilometres from the IMIP in the Morowali Regency, Central Sulawesi, Indonesia.
The Hengjaya Mine tenement covers 5,983 hectares and holds a 20-year mining operation/production licence (issued in
June 2011) with two further 10-year extension periods.
Mining
The Hengjaya Mine finished the year with a very pleasing record result for 2023, mining a combined total of 13,401,289
wmt of nickel ore (3,832,833 wmt of saprolite and 9,568,456 wmt of limonite), an increase of ore production of 97.2%
versus 2022 year of 6,792,851 wmt. The result of this increased production and sales was an EBITDA contribution of
$87.9M from the Hengjaya Mine in 2023, compared to the $53.9M EBITDA contribution from the mine in 2022.
Saprolite mined
Limonite mined
Nickel ore mined
wmt
wmt
wmt
Mar 2023
Quarter
Jun 2023
Quarter
Sept 2023
Quarter
Dec 2023
Quarter
662,004
692,937
1,013,949
1,463,943
1,822,636
2,029,624
2,616,041
3,100,155
Total
3,832,833
9,568,456
2,484,640
2,722,561
3,629,990
4,564,098
13,401,289
Overburden mined
BCM5
398,017
226,798
332,155
381,494
1,338,464
Strip ratio
BCM/wmt
0.16
0.08
0.09
0.08
0.1
Haul road
In August 2023, the Company completed the haul road between the Hengjaya Mine and the IMIP. This included the
construction of a 70-metre double lane bridge with public road underpass near the entrance of the IMIP. The completion
of the haul road represents a landmark development in the history of the Company’s mining operations and will allow
the mine to rapidly increase total ore sales from current levels of ~3.5M tonnes per annum to a targeted 10M tonnes
per annum. The trucking of limonite ore on the haul road commenced in September. Whilst there were initial delays
in commissioning and ramping up the limonite haulage fleet, the mine haul road is now fully operational with a full
complement of trucks and the Company anticipates a significant increase in limonite sales during 2024.
An official ceremony to mark the opening of the haul road was held on Thursday 3 August 2023 and was attended by
several senior Nickel Industries executives including Chairman Norman Seckold, Managing Director Justin Werner and
Director James Crombie, in addition to Tsingshan Chairman Xiang Guangda, now retired Shanghai Decent Chairman and
Nickel Industries Director Huang Weifeng and Eternal Tsingshan Chairman and Nickel Industries Director Xiang Binghe.
5
BCM represents ‘bank cubic metres’.
10
Nickel Industries Annual Report 2023
Review of Operations
Nickel Industries’ Chairman Norman Seckold and Managing Director Justin Werner officially open the Hengjaya Mine to IMIP
Haul Road with Tsingshan Chairman Xiang Guangda
Exploration
During 2023 there were a total of 119,718 metres resource definition and infill drilling at Hengjaya Mine. Infill drilling
totalled 116,787 metres, while exploration drilling accounted for 2,691 metres, disposal drilling drilled 1,256 metres. All
drilling costs were absorbed into the mine’s operating costs.
The 4,936 holes drilled in 2023 focused on the infill drilling mostly developed in Central West, Central East, Central
North Bete Bete South, Bete Bete, while the exploration drilling (100m x 100m) drilled in Central East and Central
North, and in the first half of the year drilled in Central North, the disposal drilling drilled in the September Quarter in the
Central West, and Bete Bete South.
The mine reconciliation of saprolite ore modelled versus actual saprolite mined continued to confirm excellent results,
well above the forecasted industrial recovery of +80% throughout the planning and mining operations.
Closely associated with drilling activities is the Hengjaya Mine’s on-site laboratory which includes preparation and
assay facilities. During the year, the laboratory processed and assayed over 121,341 exploration samples, enabling
fast turnaround times whilst being very cost affective across all areas of exploration, mine grade control and
barging operations. A percentage of samples were also sent off-site to a 3rd party for quality control and assurance
reconciliation.
Annual Report 2023 Nickel Industries
11
Review of Operations
Drilling Achievement 2019 – 2023 per Year
Drilling progress and drill rig locations - December 2023
12
Nickel Industries Annual Report 2023
Review of Operations
The Hengjaya Mine team received a couple of gold awards at the Nusantara CSR Awards 2023
COMMUNITY DEVELOPMENT AND SUSTAINABILITY
Community development
The Company’s Hengjaya Mine received two gold trophies at the Nusantara CSR Awards 2023 for the SEA Tangofa
(Selamatkan Terumbu Karang/Coral Reef Tangofa) and CSP HM (Collaborative Stakeholders for PPM HM). These latest
awards further strengthen Nickel Industries’ credentials as a responsible metal producer in the region.
Moreover, the Hengjaya Mine was also nominated as the recipient of the Indonesia Sustainable Development Goals
Award (ISDA) 2023 for the fisherman empowerment program at Bete Bete Village.
Environment and Sustainability
In 2023, the Company conducted a detailed study to design its biodiversity conservation area with a total of 200 Ha in
the Hengjaya Mine site. Once completed, this technical document will be submitted to the Indonesian government for
further evaluation. Additionally, the Company also aimed to strengthen its waste management processing at the mining
area by developing a Material Recovery Facility (MRF) that will be able to recycle some of the generated waste into
organic fertiliser and more valuable materials. The construction of this MRF facility is expected to start before the end of
this year.
Annual Report 2023 Nickel Industries
13
to Indonesian-based metals and mining companies,
underscoring the Company’s ongoing commitment to
sustainability and responsible business practices. The
upgraded MSCI ESG rating reflects the Company’s
steadfast dedication to environmental stewardship, social
responsibility, and ethical governance. The Company
has undertaken significant efforts to enhance its ESG
performance across various aspects of its operations,
resulting in this notable achievement. Additionally, Nickel
Industries was also nominated as the winner of the
TrenAsia ESG Award 2023 for the sustainability aspect of
the nickel mining sector. The TrenAsia ESG Award 2023
jury consists of representatives of the Financial Services
Authority, the Indonesian Chamber of Commerce
(KADIN), Investment Managers, ESG practitioners, the
Indonesian Entrepreneur Association, and the National
Committee on Governance Policy.
Placement and execution of collaboration agreement
with United Tractors
In June, the Company entered into a conditional share
subscription agreement (Subscription Agreement) for a
A$943M ($628M) placement of shares in the Company
(Conditional Placement) to PT Danusa Tambang
Nusantara (DTN), a subsidiary of PT United Tractors Tbk
(United Tractors).
The Conditional Placement comprised the issuance of
857M new fully paid ordinary shares (New Shares) at
A$1.10 per New Share (Placement Price), representing
a 27.2% premium to the last traded price of A$0.87 on
Thursday, 8 June 2023 (the day prior to announcement).
The New Shares represent approximately 19.99% of
the Company’s total ordinary shares outstanding. The
Conditional Placement was approved by shareholders at
an EGM held on 8 September 2023.
The Company sees numerous benefits to its collaboration
with United Tractors and DTN that include but are not
limited to:
• additional local knowledge and operational expertise:
United Tractors is one of the largest heavy equipment
distributors and mine operators in Indonesia and has
deep knowledge of the Indonesian mining landscape;
and
•
financial firepower: DTN’s investment provides Nickel
Industries with an immediate capital injection of
A$943M, strengthened Nickel Industries’ balance
sheet and positioned the Company as well funded for
the acquisition of a 55% interest in the ENC project,
which will further establish Nickel Industries as a
leading global and diversified nickel company.
Review of Operations
Moreover, Nickel Industries is pleased to be nominated as
the “Most Promising Transitioning Company” at the ESG
World Summit & GRIT Awards 2023 during this quarter
in Bangkok. The accolade was granted for the Company’s
leadership in transforming its business operations to
contribute towards sustainability and its numerous
initiatives to minimise the impact of its operations on
the environment. The Summit and Awards are organised
by CorpStage and ESG Research Foundation. The
GRIT Awards stand for: Growth, Resilience, Intention
and Innovation, and Transcending. The Awards aim to
“advance responsible capitalism” and green initiatives
recognising outstanding companies which are making
strides towards a sustainable world through impactful
environmental, social, and governance (ESG) practices.
Furthermore, the Company has received an upgraded
MSCI ESG (Environmental, Social, and Governance)
rating to ‘BBB’, the highest MSCI ESG rating given
Nickel Industries’ nomination as the “Most Promising
Transition” Company at the 2023 ESG World Summit and
GRIT Awards
14
Nickel Industries Annual Report 2023
Review of Operations
The interest rate applicable on the Facility will be a margin
above the Secured Overnight Financing Rate (SOFR)
(currently ~5.3%), according to the following schedule: (i)
initial 12-month period: 2.00%; (ii) months 12-18: 3.00%;
and (iii)18 months onwards: 3.50%.
The margin applicable to the RCF will be 3.00%.
The Facility represents a new source of funding for the
Company within the local Indonesian banking industry.
The Facility, along with placement funds of A$943M
(~US$628M) recently received from United Tractors,
in addition to the Company’s existing cash and strong
ongoing cash flows from its existing operations, leaves
the Company well positioned to fund its share of the ENC
acquisition payments (US$1.29 billion including option
fee) over the Project construction period of 2023 to 2025.
In late December 2023 the Company drew down
US$189.8M of the facility, ahead of making a US$189.8M
payment for an additional 8.25% interest in the ENC
project.
$400M Senior Unsecured Notes Issuance and
concurrent refinance and tender offer of existing
bonds
In April, the Company completed a $400M issuance of
senior unsecured notes (Notes), the refinancing of the
Company’s $225M senior secured notes and completion
of a Concurrent Tender Offer for the existing $325M
senior unsecured notes maturing in April 2024 (Target
Notes).
Under the tender offer the Company accepted valid
tender for an aggregate amount of $80,082,000 at a
purchase price equal to 102% of the principal amount of
the Target Notes.
A material outcome of the New Notes issuance was a
removal of all secured debt and a simplification of the
Company’s capital structure. The Company’s outstanding
bonds now comprise $400M of Notes (maturing 21
October 2028) and $244.9M of Target Notes (maturing
1 April 2024). Importantly, the Notes extended the
Company’s debt maturity profile, optimally positioning it
to continue the strong growth trajectory to becoming a
leading producer of battery grade class 1 nickel.
Completion of HNC HPAL and Oracle Nickel
Acquisitions
Following shareholder approval at an EGM held on 5 July
2023, the Company completed the acquisition of a 10%
equity interest in HNC and an additional 10% interest
in the Oracle Nickel project, in addition to completing
the payment obligations of two future battery nickel
opportunities (collectively the Acquired Options)
contemplated under its Electric Vehicle Battery Supply
Chain Strategic Framework Agreement (announced in
January 2023).
The Company:
•
issued to a Shanghai Decent affiliate company (Decent
Investment International Private Limited) 381,365,628
ordinary shares in Nickel Industries at an issue price
of $1.02, as consideration for acquiring the 10% equity
interest in HNC; and
• made a cash payment of US$75M to Shanghai
Decent, as consideration for the additional 10%
equity interest in Oracle Nickel Project, increasing the
Company’s interest from 70% to 80%. An additional
retained earnings settlement variance of $1.5M will
also be made to Shanghai Decent in respect of the
10% of undistributed profits prior to the Company’s
acquisition of the additional 10% interest.
The Company has also completed the payment
obligations for the two Acquired Options with cash
payments to Shanghai Decent of US$40M comprising:
• US$25M consideration for an option to participate in
the construction and ownership of the ENC project
(refer below for more detail); and
• US$15M consideration for an option to invest in and
construct a high-grade matte converter at Oracle
Nickel.
Both options secure access to proprietary technology and
experienced technical teams from Shanghai Decent to
support the future success of these projects.
US$400m loan facility with leading Indonesian
bank
In October 2023 the Company executed financing
facilities totalling US$400M with PT Bank Negara
Indonesia (Persero) Tbk Singapore Branch (BNI), a tier-1
Indonesian Bank, to support the Company’s funding
obligations in relation to the ENC Project.
The facilities comprise a 5-year senior term loan facility
(the Facility) of US$350M, split across two tranches:
•
tranche A: US$200M (secured against the Company’s
Angel Nickel Project and associated shareholder
loans); and
•
tranche B: US$150M (unsecured).
In addition, the Company has secured a US$50M
revolving credit facility (RCF), for general working capital
purposes.
Annual Report 2023 Nickel Industries
15
Review of Operations
Key details of the Notes are as follows:
Issuer
Issue size
Coupon
Nickel Industries Limited
$400M
11.25% per annum, payable on a semi-
annual basis in arrears
Distribution format Rule 144A / Regulation S
Amortisation
11% amortisation on April and
October each year commencing 21
October 2025
Final maturity date 21 October 2028
Listing
Notes are listed on the Singapore
Exchange Securities Trading Limited
(SGX-ST)
144A ISIN
Reg S ISIN
US653890AA15
USQ67949AC34
Equity Capital Raise
To fund the acquisition of the 10% interest in HNC and
the additional 10% interest in Oracle Nickel, as well as the
Acquired Options the Company undertook a capital raise
(Equity Raise).
The Equity Raise comprised:
(i) a $185.7M (A$264.3M) fully underwritten, institutional
placement (Institutional Placement);
(ii) a $270M (~A$386M) placement to Newstride (or its
nominee), a $15M (~A$21M) placement to Shanghai
Wanlu Investment Co. Ltd. (or its nominee) and $1.4M
(~A$2M) placement to former Non-Executive Director
Mark Lochtenberg on a non-underwritten basis
(Conditional Placement); and
(iii) a non-underwritten share purchase plan (SPP) to
eligible shareholders in Australia and New Zealand.
The Institutional Placement was successfully completed
on 19 January 2023 and the SPP offer closed on 24
February 2023. Under the SPP the Company issued
33,880,135 shares at A$1.02 for total receipts of
A$34,557,737.70.
The Conditional Placement was approved by FIRB on 30
June 2023 and by shareholders at an EGM held on 5 July
2023, and all shares to be issued under the Conditional
Placement had been issued by 3 August 2023.
2022 Sustainability Report
The Company released its 2022 Sustainability Report
in March 2023. Significant progress was made by the
Company across numerous sustainability initiatives
in 2022, evidenced by Nickel Industries becoming the
only nickel company to receive seven trophies at the
Environmental and Social Innovation Awards, earning a
silver award at the Asia Sustainability Reporting Rating
and achieving a “Green Proper” rating for the Hengjaya
Mine from the Indonesia Ministry of Environment and
Forestry. In addition, the Company was nominated as
a finalist for three categories at the Asia Sustainability
Reporting Awards and was included in the top-half of
ESG performers in the global Mining and Metals Industry
according to the S&P Global.
16
Nickel Industries Annual Report 2023
This report builds on the Company’s maiden 2021
Sustainability Report and reflects the strong commitment
the Company has regarding reporting transparency
across both its mining and downstream processing
operations. With Nickel Industries having established
itself as a large and active participant across Indonesia’s
mining and industrial landscape, the Company is highly
committed to contributing to a more sustainable future
for these industries and to advancing the welfare of
Indonesia’s people through employment opportunity and
social progression. The Company also looks forward to
continuing to reduce the carbon footprint of its operations
through the adoption of and adherence to industry ‘best
practice’ mining and processing standards, in addition to
the gradual transition to renewable forms of energy and
production diversity into lower carbon intensive products
that will contribute to a green energy future.
Second Green PROPER rating
In December the Company’s Hengjaya Mine was once
again awarded the Green PROPER Award from the
Ministry of Environment and Forestry (KLHK), which
indicates beyond compliance practices in terms of ESG
implementation and reporting. The Hengjaya Mine
became the sole entity from Morowali and the only mining
company from Central Sulawesi to achieve this rank,
confirming its growing status as a showpiece mine for
responsible and sustainable nickel mining in Indonesia.
Additionally, the Hengjaya Mine was also nominated as
the recipient of the Indonesia Sustainable Development
Goals Award (ISDA) 2023 for the fisherman empowerment
program at Bete-Bete Village. The Hengjaya Mine was
one of more than a hundred companies assessed for this
accolade nationally.
Presentation to COP28 Climate Summit and
announcement of future emission targets
As a leading exponent of responsible and sustainable
nickel mining in Indonesia, the Company was invited
to present at the 2023 United Nations Climate Change
Conference (COP28) in the United Arab Emirates (UAE)
on 2 December 2023.
At the conference the Company announced its future
emission targets, committing to a 50% reduction
in carbon intensity by 2035 and net zero emissions
by 2050, outlining some of the current and future
initiatives that are going to be implemented, to reduce
its carbon footprint and support the sustainability of the
environments and communities in its area of operations.
Nickel Matte sales contract with Glencore
In December, the Company entered into a maiden nickel
matte sales contract with Glencore AG (Glencore).
The contract, commencing January 2024 and running for
an initial 6-month term, will result in nickel matte from
the Company’s Hengjaya Nickel Project being sold to
Glencore. This initial sales contract represents a maturing
of the Company’s nickel matte business and an important
diversification of its customer base into western markets
closely linked with the global EV supply chain.
Volume and pricing terms remain commercial in
confidence.
Review of Operations
In November, following his retirement as President
Director of Shanghai Decent, Huang Weifeng also
retired as a Non-Executive Director of the Company. His
position as Non-Executive Director and a representative
of Shanghai Decent will be taken by Mr Wang Haijun. Mr
Wang is also replacing Mr Huang as President Director
of Shanghai Decent. Mr Huang joined the Board of the
Company in April 2018, in the lead up to the Company’s
listing on the ASX, when the Company and Shanghai
Decent signed their initial Collaboration and Subscription
Agreement. Since then, he has been an integral part of
the growth of the Company and the partnership between
the Company and Shanghai Decent.
Mr Wang was the CEO of Shanghai Decent from 2008
until his move to replace Mr Huang as President Director
of Shanghai Decent. He has worked in various senior roles
with Tsingshan since 2004, including as CEO of Ruipu
Technology Group from 2013 to 2016. He has a Degree
from Beijing University of Aeronautics and Astronautics,
majoring in Solid Rocket Engines, as well as post graduate
degree from the China Academy of Launch Vehicle
Technology majoring in Liquid Rocket Engines.
In November, Mark Lochtenberg retired as a Non-
Executive Director of the Company. Mr Lochtenberg
joined the Board of the Company in March 2017, prior to
the Company’s listing on the ASX the following year.
In December, the Company announced the retirement
of Mr Rob Neale who had served as the Company’s
Chairman since April 2018, leading the Company through
its Initial Public Offering in August 2018 to its current
position as a global-top 10 nickel producer.
Company founder and former Deputy Chairman Norm
Seckold replaced Mr Neale as Executive Chairman,
effective 1 January 2024.
Declaration and payment of maiden interim and final
dividends
In February 2023, the Company declared a final dividend
for 2022 of A$0.02 per share, being a distribution of
A$60.5M ($40.7M). In July 2023, the Company declared
a A$0.02 interim dividend. The dividend was paid on 14
August 2023, totalling A$68.6M ($44.9M).
Execution of binding agreement for solar project
at IMIP
In October 2023, the Company signed a binding
Operational Lease and Service Agreement (OLSA) with PT
Sumber Energi Surya Nusantara (SESNA) with respect to
the development, installation, operation and maintenance
of a 200MWp + 20MWh battery solar project within the
IMIP. This solar project is designed to supply electricity
to the Company’s existing RKEF operations, along with
the future ENC Project, and represents a transition of the
Company’s operations to renewable energy sources.
Under the terms of the OLSA, Nickel Industries will be
the long-term offtake partner for SESNA and will not
be required to contribute any capital funding. SESNA is
responsible for the construction and commissioning of
the project, which is expected to occur within 36 months
of signing the agreement. This solar project supplements
the Company’s existing 450kWp plus 250kWh battery
storage project at the Hengjaya Mine (also in partnership
with SENSA) which replaced diesel-powered generators
and expected to reduce diesel consumption by
approximately 31 million litres over the 25-year projected
project life.
Board Changes
In May, the Company appointed Xiang Binghe as a Non-
Executive Director of the Company. Mr Xiang has been
a key member of the rapid development of Tsingshan
since 2000. Mr Xiang has already played a key role in the
development of the Company’s RKEF operations, as a
Shanghai Decent nominee to the Board of the Company’s
Indonesian RKEF entities, as well as a director of the
Company’s Singaporean subsidiary holding companies.
In his current role as Chairman of Eternal Tsingshan, he
has successfully led the management, development and
operations of the IMIP and the IWIP.
The Company appointed Muliady Sutio as a Non-
Executive Director of the Company, satisfying United
Tractors’ right to a Board seat upon completion of their
19.99% equity interest in the Company.
Mr Sutio currently serves as the President Director
of DTN, now a 19.99% Nickel Industries shareholder,
President Director of PT Agincourt Resources which
operates the world class 6.5 million ounces resources
Martabe gold mine and is Commissioner of the following
companies: PT Energia Prima Nusantara (a renewable
energy company with interests in solar- and hydro-
power operations), PT Persada Tambang Mulia, PT
Sumbawa Jutaraya, PT Bhumi Jepara Services and PT
Unitra Nusantara Persada, all of which are subsidiaries
companies of the United Tractors group.
Annual Report 2023 Nickel Industries
17
Review of Operations
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)
Introduction
Nickel Industries recognises its responsibility to support the global effort to transition to a low-carbon economy, whilst
ensuring that its operations reduce its exposure to climate risks.
Climate Action
In December 2023, Nickel Industries announced its emission reduction target against the backdrop of the COP28
United Nations Climate Change Conference that took place in Dubai, United Arab Emirates. During the conference, the
Company unveiled its commitment to a 50% reduction in carbon intensity by 2035 and net zero emissions by 2050.
Nickel Industries was one of only two companies with Indonesian mining operations invited to present at the
conference, reflecting the growing recognition it is receiving for taking a leadership role in advancing the sustainability
of Indonesia’s nickel industry.
Climate Strategy
This year, as part of our ongoing commitment to international best practices, Nickel Industries has chosen to be an early
adopter of some of the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards and aims
to increase its disclosures over time to fully comply with these standards. These standards establish a global foundation
for sustainability disclosures tailored to the needs of investors and financial markets, enhancing trust and confidence in
company sustainability disclosures for more informed investment decisions.
These standards have been developed by building upon the efforts of investor-focused reporting initiatives driven by
the market, including the Climate Disclosure Standards Board (CDSB), the Task Force for Climate-related Financial
Disclosures (TCFD), the Value Reporting Foundation’s Integrated Reporting Framework and industry-based SASB
Standards, as well as the World Economic Forum’s Stakeholder Capitalism Metrics.
Building on the Company’s previous advancements within the TCFD framework and now transitioning into the IFRS
Sustainability Standards, Nickel Industries remains steadfast in strengthening its climate resilience and capitalising on
the opportunities arising from this transitioning economy. Our objective is to progressively align over time with Climate-
related Disclosures (IFRS S2) starting from 2024.
In alignment with short, medium, and long-term climate actions developed in 2021, we have further engaged
external consultants in 2023 to assist in the creation of our decarbonisation roadmap. This initiative is integral to our
commitment to achieve a 50% reduction in carbon intensity by 2035 and reach net-zero emissions by 2050. Through
these efforts, we aim to address climate-related challenges and capitalise on relevant opportunities in a systematic and
impactful manner.
Short-term Strategy
Medium-term Strategy
Long-term strategy
In 2021, the Company
initiated the development
of a Greenhouse Gas (GHG)
inventory, coupled with a
comprehensive analysis of
governance and risks.
To further this endeavour,
Nickel Industries collaborated
with Pertiwi Consulting and
Hatch. The assessment aimed
to understand our emissions
profile, and results revealed that
the predominant contributors
were coal combustion and
electricity consumption.
In response, we have identified
optimising fuel and energy
consumption as a key short-
term action to mitigate our
environmental impact.
Given the current status of Scope
1 and 2 GHG emissions, along with
the climate scenario analysis and the
formulation of a coal climate policy,
it is anticipated that carbon-related
regulations may be enacted in the near
future.
Recognising the potential financial
impact of such regulations, including
the imposition of penalty fees and the
necessity for reduced emissions, Nickel
Industries is proactively directing its
efforts towards energy transition.
This involves strategic investments in
renewable or lower-emission energy
options and technology across key
operations.
Notably, the development phase of
a solar power project with a capacity
exceeding 200 MW at IMIP is underway,
offering a promising avenue for
emissions reduction in our processes.
Anticipating increased pressure from
international and national regulations
to reduce GHG emissions, The
Company is strategically planning to
mitigate transition risks associated
with the adoption of low-carbon
technologies. This involves the
installation of renewable energy
technologies at our sites.
Recognising the time-intensive
nature of this technological transition,
additional studies are underway. In
parallel with the gradual reduction of
carbon emissions through operational
changes, the Company is exploring
the implementation of mechanisms
to offset carbon emissions during the
transition period.
Nickel Industries is also
leveraging market opportunities
in the development of low-carbon
technologies, including supplying ore
to battery manufacturers.
18
Nickel Industries Annual Report 2023
Review of Operations
Climate Risk and Resilience
Nickel Industries is dedicated to taking proactive measures to tackle the challenges associated with climate change.
We recognise the financial implications posed by climate-related risks and respond by systematically accounting for our
GHG emissions while prioritising the assessment of the most financially significant risks. Our commitment extends to
the development of a holistic sustainability strategy, which not only mitigates our vulnerability to climate-related risks
but also identifies avenues for innovation and expansion within the emerging low-carbon economy.
Aspect
Importance
Risk
Description
Physical
Risk
Temperature
Precipitation
Sea Level
Rise
Disasters
Nickel Industries recognises
the potential physical risks
associated with climate change,
including extreme weather
events and long-term shifts in
weather patterns that could
impact our operations. These
risks may result in production
delays, increased costs,
loss of productivity days,
and heightened liabilities.
To comprehensively assess
current and future risks,
we employ various climate
scenarios. These scenarios offer
distinct descriptions of future
climate projections based on
greenhouse gas concentration.
We evaluate physical risks using
IPCC RCP 4.5 and 8.5 scenarios,
representing medium and high
emission concentrations, to
gauge the potential severity of
climate change impacts on the
Company.
The Representative
Concentration Pathway (RCP)
is a scenario developed by
the Intergovernmental Panel
on Climate Change (IPCC)
that describes different
climate futures based on the
trajectory of greenhouse gas
concentration and its radiative
forcing. The scenario has a set
of projections and is named
after its radiative forcing
values. RCP 4.5 is a moderate
scenario in which emissions
peak around 2040 and then
decline. RCP 8.5 is the highest
baseline emissions scenario in
which emissions continue to
rise throughout the twenty-first
century.
IMIP and IWIP are experiencing temperature
increases, with both scenarios indicating a range
of 28-29°C (approximately a 0.6°C increase). This
additional temperature rise poses challenges for
field working conditions, potentially making them
harsher, as well as potentially increasing demand
for water resources.
In both scenarios, IWIP is anticipated to undergo
an increase in average precipitation ranging from
2,500 to 2,700 mm per year. On the other hand,
precipitation around IMIP is slightly reduced from
2,300 to 1,900 mm annually. Despite the rise in
precipitation in IWIP, a study using scenario RCP
8.5 indicates a tendency for longer dry periods (6
months) in North Maluku Province compared to
Central Maluku Province (3 months). In Central
Halmahera, where IWIP is situated, the quality of
surface water might pose a challenge.
Both IMIP and IWIP are situated in coastal areas.
Currently, the available data has not indicated
a rise in sea levels. However, it is important to
note that data on the rise of sea levels is limited.
High tide events were recorded in Central
Sulawesi Province in 2015 and 2018, but as of
now, they have not had a significant impact on the
operations of IMIP.
Climate-related disasters have been documented
in both Central Sulawesi and North Maluku
provinces. Historical data from 2015 to 2021
reveals instances of flooding, landslides, storms,
and forest fires in Central Sulawesi, while North
Maluku faced flooding, landslides, storms,
droughts, and forest fires during the same period.
Fortunately, these disasters have not directly
impacted the Company’s operational sites,
resulting in significant financial losses.
The only notable indirect impact occurred in
2019 when flooding in North Konawe Regency,
Southeast Sulawesi Province, affected Nickel
Industries’ operations. This event led to a
reduction in nickel production, disrupted mining
operations and logistics, and resulted in damaged
public facilities, including three broken bridges.
The disruption caused a decrease in mine
production from 127,000 to 78,000 wet metric
tonnes in the second quarter of 2019, primarily
due to logistical challenges and staff movement
disruptions on the HM site.
Annual Report 2023 Nickel Industries
19
Review of Operations
Risk
Policy
Aspect
Importance
Transition
Risk
Nickel Industries recognises
that the global shift toward low-
carbon development, aligned
with the Paris Agreement, could
potentially impact our business,
particularly in the mining and
metal production sectors,
which are often associated with
significant greenhouse gas
emissions due to their energy-
intensive operations. To assess
transitional risks, we employ
the International Energy Agency
World Energy Outlook (IEA
WEO) 2021 Announced Policy
and Sustainable Development
Scenarios for the years 2021 to
2050. This IEA WEO scenario
serves as a valuable tool for
evaluating our preparedness
for forthcoming changes in the
global energy landscape.
Technology
Description
Nickel Industries faces medium risks related to
policy changes in the IEA WEO 2021 ‘Announced
Pledges’ and ‘Sustainable Development’ Scenario.
The Company may encounter challenges due
to regulatory shifts promoting low carbon in the
energy and power sector. Indonesian regulations
are rapidly evolving, showcasing a clear direction
toward low-carbon development. This policy shift
also influences the nickel market.
The Indonesian Government is actively integrating
climate considerations across various policy areas
to achieve its Nationally Determined Contribution
(NDC) target, aligning with the IEA WEO 2021
‘Announced Pledges’ scenario, spanning power
generation to industry. Specific regulations
include not building new coal power plants by
2030 and increasing the use of renewables in the
energy mix, with targets of 14% natural gas and
30% renewable energy sources.
In the ‘Sustainable Development’ scenario,
policies pivot towards supporting the deployment
of Carbon Capture Storage (CCS)/Carbon Capture
Utilisation and Storage (CCUS) and hydrogen in
industries and fuel transformation. Both scenarios
emphasise policy measures for carbon, energy
efficiency, and management. While hydrogen has
the potential to become a significant renewable
resource, its use is currently being studied and
planned in Indonesia. Similarly, CCS/CCUS is
in the development and pilot phase, with the
government preparing regulations to reduce
carbon emissions from hard-to-abate industries,
despite debates and scepticism about the
widespread application of this technology.
Nickel Industries is exposed to medium to
long-term risks involving potential additional
costs in its operations due to the technology
shift, primarily stemming from policy changes
in the energy and power plant sectors. The IEA
WEO 2021 ‘Announced Policy’ and ‘Sustainable
Development’ scenarios envision the adoption of
low-carbon technologies across the energy sector,
including crucial renewable electricity production
and storage technologies. While both scenarios
project that technology will become progressively
cheaper over time, the initial shift requires
significant capital investment.
Additional costs may arise from the
implementation of a potential carbon tax, driven
by the high intensity of carbon emissions from
fossil fuel technologies..
20
Nickel Industries Annual Report 2023
Review of Operations
Aspect
Importance
Risk
Description
Market
Reputation
Nickel Industries faces low market risk,
encountering fewer challenges in both the IEA
WEO 2021 ‘Announced Pledges’ and ‘Sustainable
Development’ scenarios. Nickel continues to
play a pivotal role in emerging industries, and our
strategic product diversification efforts effectively
manage market risks. The prevailing favourable
conditions validate future business prospects.
Nickel Industries has actively explored new
markets and diversified its products, enhancing
its competitiveness for the future. The growing
demand for EVs directly impacts the demand for
nickel, aligning with the trajectories outlined in
both scenarios. The increased interest in the EV
battery industry globally, particularly in China and
Indonesia, presents new opportunities for the
Company to participate.
The Company encounters moderate risks
regarding its reputation, a common challenge
for mining and processing industries associated
with perceived negative impacts on climate
change, environmental degradation, and social
conflicts. The global shift towards low-carbon
development aligns with the goals of the Paris
Agreement, aiming to limit temperature increases
to 1.5 degrees. Investors are increasingly attuned
to climate policy trends, and financial institutions
factor climate change considerations into their
lending practices.
Annual Report 2023 Nickel Industries
21
Climate Governance
Nickel Industries has established a sustainability
committee dedicated to addressing ESG concerns,
with a specific focus on climate change. The Company
recognises climate change as a significant governance
and strategic issue, consistently featuring on the agenda
of the Board of Directors. This prominence is evident in
discussions related to strategy, portfolio evaluations,
investment decisions, risk management oversight,
and performance assessments against established
commitments.
Furthermore, the diverse backgrounds and experiences
of the Board of Directors contribute positively to the
Company’s approach to climate change and other ESG-
related matters. The varied perspectives of each Board
member are valuable in shaping decisions related to these
issues. The committee ensures that inputs and outputs
from regular sessions are integrated into the decision-
making process.
Metrics and Targets
The Company will publish its detailed roadmap to achieve
the targets of a 50% reduction in carbon intensity by 2035
and net zero emissions by 2050 in its 2023 Sustainability
Report, which is expected to be made publicly available in
the first half of 2024.
CORPORATE GOVERNANCE STATEMENT
The Board is committed to maintaining standards of
Corporate Governance. Corporate Governance is about
having a set of core values and behaviours that underpin
the Company’s activities and ensure transparency, fair
dealing and protection of the interests of stakeholders.
The Company has reviewed its corporate governance
practises against the Corporate Governance Principles
and Recommendations (4th edition) published by the ASX
Corporate Governance Council.
The Corporate Governance Statement is dated as at
29 February 2024, reflecting the corporate governance
practises throughout the 2023 financial year and was
approved by the Board of Directors of the Company
on 29 February 2024. A description of the Company’s
current corporate governance practises is set out in the
Company’s Corporate Governance Statement which can
be viewed at
www.nickelindustries.com.au/corporate-governance/.
Review of Operations
Climate Risk Management
Nickel Industries proactively searches for opportunities
to further enhance its climate risk management approach
to mitigate potential disruption in its operations due to
increased risk of disasters in its surrounding sites, mainly
attributed to physical and transition risks. This may lead to
an increase in business costs due to possible delays.
In addressing physical risks, the following risk
management measures are considered:
• continue to monitor the development of acute and
chronic physical risks by collecting yearly data;
• develop water management plans;
• monitor water usage and analysis;
•
recycle used water and lessen water loss due to waste,
leakage, and evaporation; and
• develop a contingency plan whenever such extreme
climate disasters arise, both onsite and offsite.
Further, the Company faces significant transition
risks, primarily stemming from policy, technology, and
reputational risks, while market risk remains relatively
low. To address these challenges, a comprehensive
transition risk management plan is being developed and
implemented, in collaboration with strategic partners.
The Company’s transition risks are largely due to its
exposure to policy, technology, and reputational risks,
while market risk remains relatively low. A comprehensive
transition risk management has to be created and
followed by strategic plans and actions that should
be conducted together with our strategic partners.
Additionally, the Company considers these measures
with the goal of increasing climate resilience and reducing
emissions:
• continuation of the ‘Future Energy’ collaboration
framework to optimise the transition to renewable
energy sources across the Company’s operations;
• proactive planning and implementation of green
practices across the Company’s operations and
facilities to anticipate a carbon tax;
• continue building its reputation as a clean nickel
producer to build trust among investors and the
broader public;
• market expansion towards high-grade nickel
to position the Company as a prominent player
in sustainable, transition-oriented businesses,
particularly within the clean EV battery sector; and
• continuous monitoring of both Indonesian and global
climate policies is an integral part of the Company’s
risk management strategy to stay adaptive and
explore potential collaborations in line with emerging
standards and regulations.
22
Nickel Industries Annual Report 2023
Directors’ Report
The Directors present their report together with the financial report of Nickel Industries Group, being Nickel Industries
Limited (‘the Company’ or ‘Nickel Industries’) and its controlled entities (‘the Group’), for the year ended 31 December
2023 and the auditor’s report thereon:
DIRECTORS
The names and particulars of the Directors of the Company at any time during or since the end of the year are:
Robert Charles Neale – Non-Executive Chairman
Non-Executive Chairman from 16 April 2018 to 31 December 2023.
Mr Neale graduated from the University of Queensland with a First Class Honours Degree in
Geology and Mineralogy with an additional major in Chemistry.
Mr Neale is the former Managing Director of New Hope Corporation Limited and the former Non-
Executive Chairman of Mayur Resources Limited. He joined NHC in 1996 as General Manager
and was appointed as an executive officer in 2005 and to the Board of Directors in 2008 until his
retirement in 2014. Mr Neale has more than 45 years’ experience in the mining, oil and gas and exploration industries
covering base metals, gold, coal, synthetic fuels and conventional oil and gas, bulk materials shipping, and power
generation. Prior to NHC he spent 23 years with Esso Australia and EXXON Coal and Minerals Company.
Norman Alfred Seckold – Executive Chairman
Executive Chairman to 16 April 2018 and again from 31 December 2023. Director since 12
September 2007.
Norman Seckold graduated with a Bachelor of Economics degree from the University of Sydney
and has spent more than 30 years in the full time management of natural resource companies,
both in Australia and overseas.
Mr Seckold has been the Chairman of a number of publicly listed companies including Moruya
Gold Mines (1983) N.L., which acquired the Golden Reward heap leach gold deposit in South Dakota, USA, Pangea
Resources Limited, which acquired and developed the Pauper’s Dream gold mine in Montana, USA, Timberline Minerals,
Inc. which acquired and completed a feasibility study for the development of the MacArthur copper deposit in Nevada,
USA, Perseverance Corporation Limited, which discovered and developed the Nagambie gold mine in Victoria, Valdora
Minerals N.L., which developed the Rustler’s Roost gold mine in the Northern Territory and the Ballarat East Gold Mine
in Victoria, Viking Gold Corporation, which discovered a high grade gold deposit in northern Sweden, Mogul Mining
N.L., which drilled out the Magistral and Ocampo gold deposits in Mexico and Bolnisi Gold N.L, which discovered and
developed the Palmarejo and Guadalupe gold and silver mines in Mexico.
Mr Seckold is currently Chairman of ASX-listed companies Alpha HPA Limited and Sky Metals Limited.
Justin Charles Werner – Managing Director
Director since 23 August 2012.
Mr Werner holds a Bachelor of Management from the University of Sydney and has been involved
in the mining industry for 20 years. He was a founding partner of PT Gemala Borneo Utama, a
private Indonesian exploration and mining company, which developed a heap leach gold mine in
West Kalimantan and also discovered the highly prospective Romang Island with then ASX-listed
Robust Resources Limited.
Prior to developing projects in Indonesia, Justin worked as a consultant, leading many successful turnaround projects
for blue chip mining companies around the world including Freeport McMoran (Grasberg deposit, Indonesia where
he spent 2 years), Lihir Gold (Lihir mine, Papua New Guinea), Placer Dome (Nevada, USA), BHP Billiton (Ingwe Coal,
South Africa), Rio Tinto (West Angeles Iron Ore, Australia), Nickel West (Western Australia) and QNI Yabulu refinery
(Queensland, Australia). He was a Director of ASX listed Alpha HPA Limited until November 2023.
Mr Werner is currently a non-executive director of ASX-listed Far East Gold Limited.
Annual Report 2023 Nickel Industries
23
Directors’ Report
Christopher Shepherd – Director and Chief Financial Officer
Chief Financial Officer since 15 November 2021. Director since 23 December 2022.
Chris Shepherd is a Chartered Accountant who holds Bachelor degrees in Applied Finance and
Commerce. Most recently Chris acted as a Partner and Managing Director of The Pallinghurst
Group in London and has over 20 years’ experience in private equity, investment banking and
corporate finance, advising on more than $30 billion in transactions across Australasia, North
America, Europe and Africa.
Prior to The Pallinghurst Group where he was responsible for establishing and executing Pallinghurst’s battery materials
investment strategy, Chris was an investment banker at Merrill Lynch and Deutsche Bank gaining extensive experience
in transaction origination, structuring and execution across the mining, industrial and consumer sectors.
James Crombie – Non-Executive Director
Director since 23 May 2008.
Jim Crombie graduated from the Royal School of Mines, London, with a B.Sc. (Hons) in Mining
Engineering, having been awarded an Anglo American Scholarship. Mr. Crombie held various
positions with DeBeers Consolidated Mines and the Anglo American Corporation in South Africa
and Angola between 1980 and 1986. He spent the next thirteen years as a Mining Analyst and
Investment Banker with Shepards, Merrill Lynch, James Capel & Co. and finally with Yorkton
Securities. Mr Crombie was the Vice President, Corporate Development of Hope Bay Mining
Corporation Inc. from February 1999 through May 2002 and President and CEO of Ariane Gold Corp. from August 2002
to November 2003. Mr Crombie was President, CEO and a director of Palmarejo Silver and Gold Corporation until the
merger with Coeur d’Alene Mines Corporation, one of the world’s leading silver companies, in December 2007. He was
a director of Sherwood Copper Corporation until its business combination with Capstone Mining Corp. in November
2008. Currently, Mr Crombie is President and CEO of Odyssey Resources Corp.
Weifeng Huang – Non-Executive Director
Director from 26 April 2018 to 1 November 2023.
Mr Huang has graduated with a Bachelor of Engineering degree from Zhejiang University and a
Masters of Business Administration from Zhejiang University.
Mr Huang began his career in several industrial enterprises and has broad management
experiences from serving as the Plant Manager of Wenzhou Tractor Plant, the General Manager
of Wenzhou Machinery Industrial Corporation, the Vice Mayor of Wenzhou and the Executive
Chairman of China Perfect Machinery Industry Corp., Ltd. Mr Huang also served as the Deputy Director of the
Management Committee of Shanghai Jinqiao Export Processing Zone, where he was appointed as a Director of
Shanghai Jinqiao Export Processing Zone Development Co., Ltd, a publicly-listed company on the Shanghai Stock
Exchange and the Deputy CEO of Shanghai Jinqiao Group. Mr Huang was also a former Chairman of the board of Harbin
High Tech (Group) Co., Ltd, another publicly-listed company on the Shanghai Stock Exchange.
Until his retirement in 2023 Mr Huang was the Chairman of Shanghai Decent Investment (Group) Co., Ltd, a flagship
company within the Tsingshan group which led in the development of the IMIP and he was a Director of PT Indonesia
Morowali Industrial Park.
24
Nickel Industries Annual Report 2023
Directors’ Report
Mark Hamish Lochtenberg – Non-Executive Director
Director from 10 March 2017 to 8 November 2023.
Mr Lochtenberg graduated with a Bachelor of Law (Hons) degree from Liverpool University, U.K.
and has been actively involved in the coal industry for more than 25 years. He was the Executive
Chairman and founding Managing Director of ASX-listed Cockatoo Coal Limited.
He was also formerly the co-head of Glencore International AG’s worldwide coal division, where he
spent 13 years overseeing a range of trading activities including the identification, due diligence,
negotiation, acquisition and aggregation of the coal project portfolio that would become Xstrata Coal. Prior to this Mr
Lochtenberg established a coal “swaps” market for Bain Refco, (Deutsche Bank) after having served as a senior coal
trader for Hansen Neuerburg AG and as coal marketing manager for Peko Wallsend Limited.
Mr Lochtenberg is currently Chairman of ASX-listed Equus Resources Limited and a director of Terracom Limited
Dasa Sutantio – Non-Executive Director
Director since 29 May 2020.
Mr Sutantio graduated with a Bachelor of Commerce degree from the Australian National
University in 1987 and has been involved in the Asian financial sector for more than 20 years,
holding various senior positions at Citibank N.A., Bank Tiara Asia Tbk., the Indonesian Bank
Restructuring Agency and PT Bank Mandiri Tbk. He joined the Indonesian Tanito Group in 2010
and is currently a Director and CFO responsible for overseeing the Tanito Group’s investments
in the financial, mining support, marine logistics/shipping, property and hospitality sectors.
Within the Tanito Group, Mr Sutantio is a Director of PT Karunia Bara Perkasa, currently the Company’s second largest
shareholder.
Muliady Sutio – Non-Executive Director
Director since 21 September 2023.
Mr Sutio has a Bachelor of Industrial Engineering degree from Trisakti University in 1994. His
career began at PT Astra International Tbk in 1994 as an Efficiency Division Analyst. Mr Sutio was
appointed as Team Leader for PT Pamapersada Nusantara’s business processes in 2000. In 2004,
he was appointed as Corporate Planning and System Development Head and in 2007, he was
appointed as Head of Supply Management. In 2014, he was appointed as President Director of PT
Energia Prima Nusantara, as well as the Director of PT Pama Indo Mining. From 2015 until 2017, he
was also appointed President Director of PT Unitra Persada Energia.
Mr Sutio currently serves as the President Director of DTN, President Director of PT Agincourt Resources which
operates the world class 6.5 million ounces resources Martabe gold mine and is Commissioner of the following
companies: PT Energia Prima Nusantara (a renewable energy company with interests in solar- and hydro-power
operations), PT Persada Tambang Mulia, PT Sumbawa Jutaraya, PT Bhumi Jepara Services and PT Unitra Nusantara
Persada, all of which are subsidiaries companies of the United Tractors group.
Annual Report 2023 Nickel Industries
25
Directors’ Report
Haijun Wang – Non-Executive Director
Director since 1 November 2023.
Mr Wang has a Degree from Beijing University of Aeronautics and Astronautics, majoring in Solid
Rocket Engines, as well as post graduate degree from the China Academy of Launch Vehicle
Technology majoring in Liquid Rocket Engines. Mr Wang was the CEO of Shanghai Decent from
2008 until his move to replace Mr Huang as President Director of Shanghai Decent. He has worked
in various senior roles with Tsingshan since 2004, including as CEO of Ruipu Technology Group
from 2013 to 2016.
Binghe Xiang – Non-Executive Director
Director since 9 May 2023.
Mr Xiang has been a key member of the rapid development of Tsingshan since 2000. His previous
experience spans many senior roles and operations including head of AOD Department of
Zhejiang Tsingshan Special Steel Company Limited, the General Manager of Zhejiang Tsingshan
Steel Company Limited, the Chairman of Zhejiang Ruipu Machinery Company Limited, the Vice
President of Ruipu Technology Group Company Limited, the Chairman of Fujian Dingxin Nickel
Company Limited and the Vice Chairman of Tsingtuo Group Company Limited.
Mr Xiang has already played a key role in the development of the Company’s RKEF operations, as a Shanghai Decent
nominee to the Board of the Company’s Indonesian RKEF entities, as well as director of the Company’s Singaporean
subsidiary holding companies.
In his current role as Chairman of Eternal Tsingshan he has successfully led the management, development and
operations of the Indonesia Morowali Industrial Park (‘IMIP’) and the Indonesia Weda Bay Industrial Park (‘IWIP’), which
are the world’s largest integrated nickel processing industrial parks with nearly 100,000 employees.
Yuanyuan Xu – Non-Executive Director
Director since 26 April 2018.
Ms Yuanyuan Xu graduated with a Bachelor’s Degree in Fashion Business and Fashion Design
from Instituto Marangoni. Since graduation, Ms Xu has focused on marketing, public relations and
procurement activities.
She is currently an Executive Director of Shanghai Wanlu Investment Co., Ltd.
MANAGEMENT
Richard James Edwards – Company Secretary
Company Secretary since 28 March 2012.
Richard Edwards graduated with a Bachelor of Commerce degree from the University of New
South Wales, is a Fellow of the Governance Institute of Australia, a member of CPA Australia and
holds a Graduate Diploma of Applied Finance and Investment from FINSIA. Mr Edwards has worked
for over twenty years providing financial reporting and company secretarial services to a range
of publicly listed companies in Australia with a focus on the mining sector. He is also Company
Secretary of ASX-listed Alpha HPA Limited and Prospech Limited.
26
Nickel Industries Annual Report 2023
Directors’ Report
Directors’ Meetings
The number of Directors’ meetings held and number of meetings attended by each of the Directors of the Company,
while they were a Director, during the year are:
Board meetings
Audit Committee
meetings
Nomination
Committee
meetings
Remuneration
Committee
meetings
Sustainability
Committee
meetings
Director
Held Attended Held Attended Held Attended Held Attended Held Attended
Robert Neale(6)
Norman Seckold
Justin Werner
Chris Shepherd
James Crombie
Weifeng Huang(4)
Mark
Lochtenberg(5)
Dasa Sutantio
Muliady Sutio(2)
Haijun Wang(3)
Binghe Xiang(1)
Yuanyuan Xu
12
12
12
12
12
11
11
12
2
1
8
12
10
12
12
12
10
10
11
9
2
1
7
12
2
-
-
-
2
2
2
-
-
-
-
-
(1) Appointed as a Director on 9 May 2023.
(2) Appointed as a Director on 21 September 2023.
(3) Appointed as a Director on 1 November 2023.
(4) Resigned as a Director on 1 November 2023.
(5) Resigned as a Director on 8 November 2023.
(6) Resigned as Chairman on 31 December 2023.
2
-
-
-
2
2
2
-
-
-
-
-
1
1
-
-
-
-
1
-
-
-
-
-
1
1
-
-
-
-
1
-
-
-
-
-
1
-
-
-
1
-
1
-
-
-
-
-
1
-
-
-
1
-
1
-
-
-
-
-
-
3
3
3
-
-
-
-
-
-
3
-
-
3
3
3
-
-
-
-
-
-
2
-
Directors’ Interests
The beneficial interests of each Director of the Company in the issued share capital of the Company are:
Director
1 January 2023
Purchased
Sold
Date of this report
Robert Neale
Norman Seckold
Justin Werner
James Crombie
Chris Shepherd
Weifeng Huang
Mark Lochtenberg
Dasa Sutantio
Muliady Sutio
Haijun Wang
Binghe Xiang
Yuanyuan Xu
10,700,000
113,715,661
29,765,228
6,580,000
57,723
3,510,000
37,538,584
-
-(2)
-(3)
-(1)
-
-
2,846,000
-
-
350,000
2,000,000
-
-
-
-
97,258,258
21,816,979
-
-
-
-
-
-
-
-
-
-
-
-
(1) Number held on date of appointment as a Director on 9 May 2023.
(2) Number held on date of appointment as a Director on 21 September 2023.
(3) Number held on date of appointment as a Director on 1 November 2023.
(4) Number held on date of resignation as a Director on 1 November 2023.
(5) Number held on date of resignation as a Director on 8 November 2023.
(6) Number held on date of resignation as a Director on 31 December 2023.
10,700,000(6)
113,715,661
32,611,228
6,580,000
57,723
3,860,000(4)
39,538,584(5)
-
-
-
-
119,075,237
Annual Report 2023 Nickel Industries
27
Directors’ Report
Dividends
The Company paid an interim unfranked dividend of A$0.02 per share during the year and a final unfranked dividend
for 2022 of A$0.02 during the year ended 31 December 2023 amounting to $85,569,052. Total dividends of A$0.04 were
paid or declared during the year ended 31 December 2023.
Significant Changes in State of Affairs
In the opinion of the Directors, significant changes in the state of affairs of the Group that occurred during the year
ended 31 December 2023 were as follows:
•
•
•
•
the Company signed an EV Battery Supply Chain Strategic Framework Agreement with Shanghai Decent and
entered into binding agreements with Shanghai Decent to acquire an additional 10% interest in the Oracle Nickel
project and a 10% interest in HNC. These transactions were completed following shareholder approval, with the
Company completing a $270M Placement to Shanghai Decent at A$1.02 per share for a 10% interest in HNC and also
acquired an additional 10% of Oracle Nickel for $75M (plus a retained earnings adjustment of $1.5M);
to fund these transactions the Company undertook an institutional placement issuing 259,103,641 shares to
complete component of the raising at A$1.02 per share, raising A$264.3M ($185.7M), before costs and a Share
Purchase Plan raising A$34.6M ($23.4M). In August 2023 following shareholder approval of a $270M Conditional
Placement to Shanghai Decent the Company completed the acquisition of 10% of HNC and an additional 10% of
Oracle Nickel, as well as paid $40M for the Acquired Options;
in April 2023 the Company completed a $400M issuance of senior unsecured notes, the refinancing of the
Company’s $225M senior secured notes and completion of a Concurrent Tender Offer for the existing $325M senior
unsecured notes maturing in April 2024;
the Company entered into a conditional share subscription agreement for a A$943M ($628M) placement of shares in
the Company to DTN (a subsidiary of United Tractors). The placement to DTN was completed in September 2023;
• commercial sales of NPI commenced at Oracle Nickel, following the completion of commissioning of the RKEF lines
and power plant;
•
the Company made a positive final investment decision (FID) for ENC, supported by US$400M of Indonesian bank
loans. At 31 December 2023 the Company had completed the acquisition of a 13.75% indirect equity interest in ENC;
and
•
the haul road and double-lane bridge linking the Hengjaya Mine to the IMIP was completed.
In the opinion of the Directors, there were no other significant changes in the state of affairs of the Group during the
year ended 31 December 2023 other than as disclosed in this Directors’ Report, or in the financial statements.
Impact of Legislation and Other External Requirements
On 12 January 2014 the Indonesian Government introduced a ban on the export of unprocessed minerals. As a
consequence, the mining operations at the Hengjaya Mine ceased. Whilst the ban on the export of unprocessed
minerals remains in place, mining operations were recommenced in October 2015 following the signing of a series of
offtake agreements to supply ore to Tsingshan group companies within the IMIP. There were no environmental or other
legislative requirements during the year that have significantly impacted the results or operations of the Group.
As disclosed in the Business Risks section of this report the Company is also monitoring the potential tax implications
and risks resulting from the Base Erosion and Profit Shifting (BEPS) Pillar 2.0 requiring multinational enterprises to pay
a minimum effective corporate tax rate of 15%
Environmental Regulations
The Group’s operations are subject to environmental regulations in the Republic of Indonesia.
The Board of Directors, the Sustainability Committee of the Company and its Sustainability Manager regularly monitors
compliance with environmental regulations. The Directors are not aware of any significant breaches of these regulations
during the period covered by this report.
The Group’s second Sustainability Report was published in March 2023.
Likely Developments
Information as to likely developments in the operations of the Group and the expected results of those operations in
subsequent years has not been included in this report because disclosure of this information would be likely to result in
unreasonable prejudice to the Group.
28
Nickel Industries Annual Report 2023
Directors’ Report
Indemnification of Officers and Auditors
During or since the end of the year, the Company has not indemnified or made a relevant agreement to indemnify an
officer or auditor of the Company against a liability incurred by such an officer or auditor. In addition, the Company has
not paid or agreed to pay, a premium in respect of a contract insuring against a liability incurred by an officer or auditor.
Non-audit Services
During the year ended 31 December 2023 KPMG, the Company’s auditor, has performed other services in addition to
their statutory audit duties.
Auditors of the Company
Audit and review of financial reports – KPMG Australia
Audit and review of financial reports – KPMG Indonesia
Other assurance services – KPMG Australia
Other assurance services – KPMG Indonesia
Advisory services – KPMG Australia
2023
$
388,483
254,567
250,515
13,413
-
906,978
2022
$
300,249
105,462
47,360
-
10,350
463,421
The Directors are satisfied that the provision of non-audit services, during the 2023 year, by the auditor, or by another
person or firm on the auditor’s behalf, is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001 (Cth). The Directors are of the opinion that these services, do not compromise the external
auditor’s independence for the following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence, as set out in Code of
Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical
Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making
capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.
Events Subsequent to Balance Date
On 30 January 2024, the Company declared a final dividend for 2023 of A$0.025 per share, being a distribution of
A$107.1M ($69.9M). At the same time, the Company announced a revised dividend policy and planned on market share
buyback of up to $100M to be conducted over a 12 month period, commencing no earlier than 1 March 2023 and subject
to DTN receiving approval from the Foreign Investment Review Board (FIRB) approval to move to a greater than 20%
equity interest in the Company as a result of any share buyback.
Other than the matters outlined above, there has not arisen in the interval between the end of the financial year and
the date of this report any other item, transaction or event of a material and unusual nature likely, in the opinion of the
Directors of the Company, to affect significantly the operations of the Group, the results of those operations, or the
state of affairs of the Group, in future financial years.
Annual Report 2023 Nickel Industries
29
Directors’ Report
Business Risk Disclosures
Risk
Description
Mitigant
Commodity price
fluctuations
As a producer of NPI and nickel matte, the earnings of Nickel
Industries are correlated to the price of NPI and nickel matte, and
Nickel Industries’ cash costs are correlated to the price of other
commodities ⁱncluding coal and nickel ore.
Commodity prices, including NPI, nickel matte, coal and
nickel ore can fluctuate rapidly and are affected by numerous
factors beyond the control of the Company. These factors
include world demand for commodities, production cost levels,
macroeconomic factors such as expectations regarding inflation,
interest rates and global and regional demand for, and supply
of, commodities, general global economic conditions, and short
positions taken by traders, miners and processors.
A decline in the market price of NPI or nickel matte, and price
fluctuations for other commodities may have an adverse effect
on the Company’s revenues and operations and the Company’s
ability to fund those operations and may require the Company to
impair the carrying value of its RKEF assets.
Reliance on
Tsingshan group
The continued operations of Hengjaya Nickel, Ranger Nickel,
Angel Nickel and Oracle Nickel and the development of HPAL
and potential nickel matte converter projects are reliant on
the relationship between the Company and Tsingshan, and
Tsinghan’s role in developing and constructing those projects.
Sales
All sales of NPI and MHP are currently sold to Tsingshan
group companies and the Company has heavy reliance on the
Tsingshan group as a purchaser of NPI produced from Hengjaya
Nickel, Ranger Nickel, Angel Nickel and Oracle Nickel.
There may be a materially adverse effect on the Company’s
financial performance and that of Hengjaya Nickel, Ranger
Nickel, Angel Nickel, Oracle Nickel and Tsing Creation if Shanghai
Decent fails to purchase all of the offtake and alternative
customers are not found.
•
Supply of ancillary services within the IMIP and IWIP
The Company and the Group Entities do not have any formal
contractual agreements for the supply of ancillary services within
the IMIP or IWIP that support the operations of Hengjaya Nickel,
Ranger Nickel, Angel Nickel and Oracle Nickel (for example,
power and access to port). The operations of the Company and
the Group Entities may be affected if these services are not
supplied as in the past.
Design and construction of the ENC Project
Additionally, Shanghai Decent is responsible for the design and
construction of the Excelsior Nickel Cobalt project, and currently
holds an 86.25% interest in the project.
30
Nickel Industries Annual Report 2023
The Company continues to focus on
minimising the cost of production,
which we believe provides a level
of cash flow protection through the
cycle.
In addition, the Company has
recently diversified its production
to include nickel matte and MHP
production – these products all
have different price drivers that
over the medium to long-term,
should increase the stability of the
Company’s earnings.
To facilitate the operations of
Hengjaya Nickel, Ranger Nickel
and Oracle Nickel within the IMIP,
and Angel Nickel within the IWIP,
Shanghai Decent has formally, in
CAs entered into with the Company
in which:
• Shanghai Decent has
committed to purchase all of the
Company’s NPI production. The
production of nickel products
other than NPI may be sold to
third parties (which Shanghai
Decent encourages) providing
customer diversification;
IMIP/IWIP provides such
services to the relevant Group
Entity in accordance with the
‘principle of non-discrimination’,
substantially the same manner,
with the same degree of care
and at the same price without
discrimination of any kind (such
as priority of entry) as it does for
users within the IMIP or IWIP (as
the case may be); and
• Shanghai Decent has provided a
nameplate (i.e. production level)
and commissioning guarantee
to the Company, and Shanghai
Decent has an extensive history
of successfully doing as such.
Finally, the Board of Directors
believes the interests of Shanghai
Decent are closely aligned with that
of the Company, given Shanghai
Decent’s major shareholding in
the Company (directly) and its
ownership interests in each of the
Company’s RKEF projects.
Directors’ Report
Risk
Description
Mitigant
Environmental,
social and
governance risk
Mining for ore and processing NPI and nickel matte can be
potentially environmentally hazardous and may give rise to
potentially substantial costs for environmental rehabilitation,
damage control and losses.
Significant liability could be imposed on the Hengjaya Mine,
Hengjaya Nickel entities, the Ranger Nickel entities, the Angel
Nickel entities, the Oracle Nickel entities, and the ENC and
HNC HPAL projects for damages, clean-up costs, or penalties
in the event of certain discharges into the environment,
environmental damage caused by previous occupiers or non-
compliance with environmental laws or regulations. Further,
the failure of the Company or its related entities to engage with
the local communities would risk disaffection on the part of
the communities, which may have adverse implications for the
Company’s operations.
Management
and key
personnel risk
The Company’s business and future success heavily depends
upon the continued services of a small group of executive
management and other key personnel.
Climate risk
Cyber risk
If one or more of the Company’s management or key personnel
were unable or unwilling to continue in their present positions,
the Company might not be able to replace them easily or at all.
The Company’s business may be severely disrupted, its financial
condition and results of operations may be materially adversely
affected, and it may incur additional expenses to recruit, train
and retain personnel.
The Hengjaya Mine and the IMIP, where the Hengjaya Nickel,
Ranger Nickel and Oracle Nickel RKEF lines and the HNC and
ENC Projects are located, is located in the Indonesian province
of Central Sulawesi. The IWIP, where the Angel Nickel RKEF lines
are located, is located in Halmahera Island in Indonesia’s North
Maluku province.
The Hengjaya Mine. Hengjaya Nickel, Ranger Nickel, Angel
Nickel Oracle Nickel and HNC operations are therefore subject
to the local climate of Central Sulawesi and North Maluku.
Exploration, mining production and transportation activities may
be susceptible to risks and hazards resulting from sustained
precipitation or other weather conditions. If these risks do
occur, they may result in production delays, increased costs and
increased liabilities.
Further, changes in laws and policies, including in relation to
carbon pricing, greenhouse gas emissions and energy efficiency,
may adversely impact operations. Technological changes,
including increasing use of renewable energy, may affect
operations.
The Company and its Group Entities rely on IT infrastructure
and systems and the efficient and uninterrupted operation
of core technologies. The Company’s core technologies and
other systems and operations could be exposed to damage
or interruption from system failures, computer viruses, cyber-
attacks, power or telecommunication provider’s failure or human
error. These events may cause one or more of the Company’s
core technologies to become unavailable. Any interruptions to
these operations would impact the Company’s ability to operate
and could result in business interruption, loss of customers and
revenue, damaged reputation and weakening of competitive
position and could therefore adversely affect the Company’s
operating and financial performance.
The Company seeks to minimise
these risks by conducting its
activities (including its operating
entities where within its control)
in an environmentally responsible
manner, in accordance with
applicable laws and regulations
and where possible, by carrying
appropriate insurance coverage.
Further, the Company maintains
strong community relations to
ensure that the local stakeholders
are supportive of the Company’s
operations in Indonesia.
Remuneration consultants have
been engaged by the Group during
the year ended 31 December 2023,
but their final reporting to the
Company still remains outstanding.
For a discussion on the Company’s
current strategy to mitigate these
risks, please refer to ‘TCFD section’
of this report.
The Company engages a reputable
third-party IT firm to manage its IT
infrastructure and cyber-security. In
early 2024 the Company changed IT
firms with the aim of enhancing its
cyber-security levels.
Annual Report 2023 Nickel Industries
31
Directors’ Report
Risk
Description
Mitigant
Changes in
taxation laws
and policies
Changes to tax laws may affect the Company and its
shareholders, and the Group Entities.
There may be tax implications arising from ownership of the
Company’s shares, the receipt of dividends (if any) from the
Company, receiving returns of capital and the disposal of the
shares. Taxation concessions available to any Group Entity may
change or cease to be applicable over time.
Further, there may be potential tax implications and risks
resulting from the Base Erosion and Profit Shifting (BEPS)
Pillar 2.0. Broadly, the rules are on new global minimum tax
and aim to ensure that multinational enterprises (MNEs) pay a
minimum effective corporate tax rate of 15%. This is expected to
be effective in 2024 and impacts countries including Australia,
Indonesia, and Singapore. Additionally, the rules are expected to
heighten the level of reporting and compliance to evaluate the
impact on the Company’s financial statements, and report to the
relevant tax authorities where required.
The Company, with its advisors,
monitors developments in this
respect and would seek to engage
the relevant authorities should any
of these risks emerge.
Further, the Company continues to
diversify its production mix which
may provide some protection
against the effects of any changes in
tax laws and policies that affect any
one nickel product.
With respect to BEPS Pillar 2.0, the
Company has taken measures to
analyse the potential impact on the
Company’s future financial and tax
position. The Company continues
to monitor any developments in
the BEPS Pillar 2.0 rules for 2024
reporting purposes.
REMUNERATION REPORT - (AUDITED)
All amounts in this remuneration report are in Australian Dollars unless otherwise stated.
Principles of Compensation - (Audited)
Key management personnel have authority and responsibility for planning, directing and controlling the activities of the
Group. Key management personnel comprise the Directors of the Company. No other employees have been deemed
to be key management personnel. The policy of remuneration of Directors and senior executives is to ensure the
remuneration package properly reflects the person’s duties and responsibilities, and that remuneration is competitive in
attracting, retaining and motivating people of the highest quality. Compensation levels have been, and will be, set to be
in line with Australian listed entities of equivalent size and comparable operations in order to attract and retain suitably
qualified and experienced key management personnel but also having regard to the prevailing financial capacity of the
Company.
The Board is responsible for reviewing and evaluating its own performance. The evaluation process is intended
to assess the Group’s business performance, whether long term strategic objectives are being achieved and the
achievement of individual performance objectives.
Remuneration generally consists of salary payments. There is no variable remuneration and no share-based payments
have been made. The remuneration disclosed below represents the cost to the Group for the services provided under
these arrangements.
Consultancy Agreements with key management personnel
The Company has entered into an executive consultancy agreement with a company associated with Norman Seckold.
Under this executive consultancy agreement, the consultancy company of Mr Seckold agrees to make Mr Seckold
available to perform the duties and responsibilities of the position of Executive Deputy Chairman. During the year
the Company received a fee of A$33,333 per month, equating to A$400,000 per annum. The consultancy agreement
commenced on 1 May 2018 and continues until terminated in accordance with its terms.
The Company has entered into an executive consultancy agreement with a company associated with Justin Werner.
Under this executive consultancy agreement, the consultancy company of Mr Werner agrees to make Mr Werner
available to perform the duties and responsibilities of the position of Managing Director. During the year the consultancy
company received a fee of US$29,533 per month, equating to US$354,396 per annum, the equivalent of A$534,075.
Additionally, Mr Werner is paid a salary by PT Hengjaya Mineralindo, which combined with his consultancy fee received
by the Company is to take his underlying salary to US$500,000. His gross compensation shown in the table below
includes amounts paid to him directly in Indonesia for travel allowance, taxes and an operational bonus equivalent to
A$51,484, which combined took his total remuneration by the group to the equivalent of A$906,521. The consultancy
agreement commenced on 1 April 2018 and continues until terminated in accordance with its terms, the employment
agreement with PT Hengjaya Mineralindo being ongoing until terminated in accord with its terms.
32
Nickel Industries Annual Report 2023
Directors’ Report
REMUNERATION REPORT - (AUDITED) (CONTINUED)
The Company has entered into an employment agreement with Director and Chief Financial Officer Chris Shepherd.
Under this agreement, Mr Shepherd received A$50,000 per month, including superannuation, equating to A$600,000
per annum, inclusive of superannuation and a performance bonus of $24,318. The agreement commenced on 1 August
2021 and Mr Shepherd assumed the position of Chief Financial Officer on 15 November 2021.
Each Executive Director is entitled to be reimbursed for reasonable travel and other expenses incurred in connection
with attending meetings of the Board and any committee on which he or she serves. The consultancy and employment
agreements may be terminated by the Company or the consultancy company by either party giving three months’
notice. The Company may in its absolute discretion make a payment in lieu of all or part of such notice and the
employment would terminate on the date that the Company notifies the Director of the termination. The Company may
terminate the consultancy agreements without notice in certain circumstances, including but not limited to a breach of
contract, criminal activity or serious misconduct by the consultancy company or the key management personnel.
Each of the Company’s Non-Executive Directors have entered into Letters of Appointment with the Company to serve
as Non-Executive Directors. During the period from 1 January 2023 to 31 December 2023, each of the Non-Executive
Directors James Crombie, Weifeng Huang, Mark Lochtenberg, Dasa Sutantio, Muliady Sutio, Binghe Xiang, Haijun
Wang and Yuanyuan Xu received a fee of A$8,333 per month, equating to A$100,000 per annum. Mr Lochtenberg’s
remuneration included superannuation. During the year a one off reduction of $7,500 to the fees paid to Non-Executive
Directors James Crombie, Weifeng Huang, Mark Lochtenberg, Robert Neale, Dasa Sutantio and Yuanyuan Xu was
made due to the Company inadvertently exceeding the fee pool threshold in place in 2022 of $750,000 per annum. This
threshold was increased following shareholder approval to $1,050,000 per annum.
During the period from 1 January 2023 to 31 December 2023, Non-Executive Chairman Robert Neale received a fee of
A$16,667 per month including superannuation, equating to A$200,000 per annum including superannuation.
Each Non-Executive Director receives a fee of A$10,000 per annum for each Board committee on which they serve.
i.e. Mark Lochtenberg and Robert Neale three committees, James Crombie two committees and Weifeng Huang one
committee.
No Directors or senior executives received performance related remuneration during the year ended 31 December
2023, other than the bonuses outlined for Mr Shepherd and Mr Werner above. Remuneration consultants were engaged
by the Group during the year ended 31 December 2023 and this work was not yet finalised. During 2023 they were paid
A$129,500.
Consequences of performance on shareholder wealth
In considering the Group’s performance and benefits for shareholder wealth, the Board has regard to the following
information in respect of the current year ended 31 December 2023 and the previous five financial periods.
2023
$
2022
$
2021
$
2020
$
6 Months
to 31
December
2019
$
2019
$
121,597,563
158,978,977
137,938,917
110,610,841
56,504,374
65,525,988
85,569,052
72,724,697
75,088,707
15,441,648
-
-
USD
Net profit
attributable to
owners of the
Company
Dividends paid
The Board also considers non-financial indices in assessing the Group’s performance and the shareholders wealth. This
includes obtaining the permits and approvals to further develop the mining operations, identifying and opportunities for
potential strategic business partnerships and ventures and the success of fund raising activities.
Annual Report 2023 Nickel Industries
33
Directors’ Report
REMUNERATION REPORT - (AUDITED) (CONTINUED)
Details of Remuneration for the Year Ended 31 December 2023 - (Audited)
Details of Director remuneration and the nature and amount of each major element of the remuneration of each
Director of the Company are set out below. All balances included are denominated in Australian dollars.
Remuneration for year ended 31 December 2023:
Short term
Post-
employment
Share
based
payments
Key
management
personnel
Salary
and fees
A$
Superannu-
ation
A$
Shares
A$
Other
Benefit(7)
A$
Total
A$
Proportion of
remuneration
performance
related
%
Value of
options as a
proportion of
remuneration
%
Executive
Directors
Norman Seckold
400,000
Justin Werner
855,037
-
-
538,641
61,359
Christopher
Shepherd(7)
Non-Executive
Directors
Robert Neale(1)
James Crombie
200,992
112,500
21,508
-
-
Weifeng Huang(2)
84,167
Mark
Lochtenberg(3)
Dasa Sutantio
Muliady Sutio(4)
Haijun Wang(5)
Binghe Xiang(6)
Yuanyuan Xu
92,929
10,754
92,500
27,778
16,667
58,333
92,500
-
-
-
-
-
Total
2,572,044
93,621
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51,484
400,000
906,521
38,385
638,385
-
6.0
4.1
-
-
-
-
-
-
-
-
-
222,500
112,500
84,167
103,683
92,500
27,778
16,667
58,333
92,500
89,869
2,755,534
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Resigned as a Director on 31 December 2023.
(2) Resigned as a Director on 1 November 2023.
(3) Resigned as a Director on 8 November 2023.
(4) Appointed as a Director on 21 September 2023.
(5) Appointed as a Director on 1 November 2023.
(6) Appointed as a Director on 9 May 2023.
(7) Other benefit includes bonuses paid and increase in annual leave balance accrued carried forward.
34
Nickel Industries Annual Report 2023
Directors’ Report
REMUNERATION REPORT - (AUDITED) (CONTINUED)
Remuneration for year ended 31 December 2022:
Short term
Post-
employment
Share
based
payments
Key
management
personnel
Salary
and fees
A$
Superannu-
ation
A$
Shares
A$
Other
Benefit(1)
A$
Total
A$
Proportion of
remuneration
performance
related
%
Value of
options as a
proportion of
remuneration
%
Executive
Directors
Norman Seckold
Justin Werner
Christopher
Shepherd(1)
Non-Executive
Directors
Robert Neale
James Crombie
Weifeng Huang
Mark
Lochtenberg
Dasa Sutantio
Yuanyuan Xu
400,000
826,500
-
-
545,455
55,909
209,092
120,000
110,000
21,432
-
-
118,182
12,114
100,000
100,000
-
-
Total
A$2,529,229 A$89,455
-
-
-
-
-
-
-
-
-
-
-
-
400,000
826,500
41,958
643,322
-
-
-
-
-
-
230,524
120,000
110,000
130,296
100,000
100,000
A$41,958 A$2,660,642
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Other benefit amount is annual leave balance accrued carried forward.
The total remuneration expense for the year ended 31 December 2023 of A$2,755,534 (December 2022: A$2,660,642)
has been recognised in the Statement of Profit or Loss at the US$ equivalent of $1,828,572 (December 2022:
$1,840,929).
Annual Report 2023 Nickel Industries
35
Directors’ Report
REMUNERATION REPORT - (AUDITED) (CONTINUED)
Movement in shares - (Audited)
The movement during the reporting year in the number of ordinary shares in the Company held directly, indirectly or
beneficially, by each key management person, including their related parties, is as follows:
1 January 2023
Purchased
Sold
31 December 2023
Robert Neale(6)
Norman Seckold
Justin Werner
James Crombie
Christopher Shepherd
Weifeng Huang
Mark Lochtenberg(5)
Dasa Sutantio
Muliady Sutio(2)
Haijun Wang(3)
Binghe Xiang(1)
Yuanyuan Xu
10,700,000
113,715,661
29,765,228
6,580,000
57,723
3,510,000
37,538,584
-
-(2)
-(3)
-(1)
-
-
2,846,000
-
-
350,000
2,000,000
-
-
-
-
97,258,258
21,816,979
-
-
-
-
-
-
-
-
-
-
-
-
10,700,000
113,715,661
32,611,228
6,580,000
57,723
3,860,000(4)
39,538,584(5)
-
-
-
-
119,075,237
(1) Appointed as a Director on 9 May 2023.
(2) Appointed as a Director on 21 September 2023.
(3) Appointed as a Director on 1 November 2023.
(4) Resigned as a Director on 1 November 2023.
(5) Resigned as a Director on 8 November 2023.
(6) Resigned as a Director on 31 December 2023.
1 January 2022
Purchased
Sold
31 December 2022
Robert Neale
Norman Seckold
Justin Werner
Christopher Shepherd
James Crombie
Weifeng Huang
Mark Lochtenberg
Dasa Sutantio
Yuanyuan Xu
700,000
10,000,000
-
123,715,661
29,765,228
57,723
6,580,000
2,820,000
37,538,584
-
97,258,258
-
-
-
-
690,000
-
-
-
(10,000,000)
-
-
-
-
-
-
-
10,700,000
113,715,661
29,765,228
57,723
6,580,000
3,510,000
37,538,584
-
97,258,258
Transactions with Key Management Personnel - (Audited)
Director Norman Seckold holds a beneficial interest in an entity, MIS Corporate Pty Limited, which provided full
administrative services, including administrative, accounting, company secretarial and investor relations staff both
within Australia and Indonesia, rental accommodation, services and supplies to the Group. Fees charged by MIS during
the year amounted to A$456,000 (31 December 2022: A$459,000). As at 31 December 2023 $nil (31 December 2022:
A$38,000) remained outstanding.
Director Xu Yuanyuan holds an interest in an entity, Shanghai Wanlu, which during the year and following shareholder
approval subscribed for 21,186,979 shares in the Company at $1.02 per share. The shares were issued to Shanghai Wanlu
nominee Valence Asia Holding Limited.
36
Nickel Industries Annual Report 2023
Directors’ Report
LEAD AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001
The lead auditor’s independence declaration is set out on page 38 and forms part of the Directors’ Report for the year
ended 31 December 2023.
Signed at Sydney this 29th day of February 2024 in accordance with a resolution of the Board of Directors:
Norman Seckold
Chairman
Justin Werner
Managing Director
Annual Report 2023 Nickel Industries
37
Lead Auditor’s Independence Declaration
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Nickel Industries Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Nickel Industries
Limited for the financial year ended 31 December 2023 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPM_INI_01
KPMG
Adam Twemlow
Partner
Brisbane
29th February 2024
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG
International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used
under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under
Professional Standards Legislation.
38
Nickel Industries Annual Report 2023
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 31 December 2023
US$
Sales revenue
Cost of sales
Notes
31 December 2023
$
31 December 2022
$
24
1,880,104,794
1,217,041,820
(1,430,421,113)
(856,617,781)
Depreciation and amortisation expense
12, 17
(111,656,383)
(66,598,202)
Gross profit
338,027,298
293,825,837
Directors’ fees and consultants’ expenses
Exploration and evaluation expenditure
(Loss)/Gain of equity accounted investees
Other expenses
Results from operating activities
Financial income
Financial expense
Net financial expense
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
17
4
5
5
(12,443,641)
(3,483,240)
(2,560,590)
(9,289,162)
(3,348,413)
404,812
(38,871,813)
(22,710,611)
280,668,014
258,882,463
13,520,610
(90,897,416)
(77,376,806)
1,007,513
(42,844,043)
(41,836,530)
203,291,208
217,045,933
11
(27,087,832)
(7,678,323)
176,203,376
209,367,610
Items that may be classified subsequently to profit or loss
(98,781)
7,088
Total comprehensive profit for the year
176,104,595
209,374,698
Profit attributable to:
Owners of the Company
Non-controlling interest
121,597,563
18
54,605,813
158,978,977
50,388,633
Profit for the year
176,203,376
209,367,610
Total comprehensive profit attributable to:
Owners of the Company
Non-controlling interest
121,518,538
18
54,586,057
158,984,647
50,390,051
Total comprehensive profit for the year
176,104,595
209,374,698
Earnings per share
Basic and diluted profit per share (cents) for the year
10
3.57
5.93
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
Annual Report 2023 Nickel Industries
39
Consolidated Statement
of Financial Position
As at 31 December 2023
US$
Current assets
Cash and cash equivalents
Term deposits and cash reserve
Trade and other receivables
Inventory
Other current assets
Total current assets
Non-current assets
Other non-current assets
Trade and other receivables
Inventory
Property, plant and equipment
Exploration and evaluation assets
Investment in equity accounted investees
Intangible Assets
Goodwill
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current tax payable
Provision
Borrowings
Total current liabilities
Non-current liabilities
Provision – rehabilitation
Deferred income tax liability
Other non-current liability
Borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained profits
Total equity attributable to equity holders of the Company
Non-controlling interest
Total equity
Notes
31 December 2023
$
31 December 2022
$
20
6
7
9
8
8
7
9
12
13
17
17
18
14
11
15
11
15
16
16
18
284,053,495
494,753,107
328,505,849
199,448,465
37,911,368
1,344,672,284
144,242,357
-
235,617,714
204,845,299
47,793,529
632,498,899
41,242,609
101,374,795
12,667,046
15,162,987
-
-
1,836,771,098
1,922,109,404
24,884,921
527,239,410
79,745,215
102,748,404
-
-
-
102,748,404
2,726,673,498
2,040,020,795
4,071,345,782
2,672,519,694
192,758,925
26,092,246
1,761,767
257,269,448
477,882,386
1,845,273
96,099,816
1,122,739
587,753,980
686,821,808
177,185,164
21,244,636
1,174,237
7,772,688
207,376,725
2,034,921
96,099,816
948,363
551,515,430
650,598,530
1,164,704,194
857,975,255
2,906,641,588
1,814,544,439
2,032,927,026
19,065,940
373,060,100
942,442,827
19,144,965
337,031,589
2,425,053,066
1,298,619,381
481,588,522
515,925,058
2,906,641,588
1,814,544,439
The above consolidated statement of financial position should be read in conjunction with accompanying notes.
40
Nickel Industries Annual Report 2023
Consolidated Statement
of Changes in Equity
For the year ended 31 December 2023
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T
Annual Report 2023 Nickel Industries
41
Consolidated Statement
of Cash Flows
For the year ended 31 December 2023
US$
Cash flows from operating activities
Cash receipts from customers
Cash payments to employees and suppliers
Interest received
Taxes and fees paid
Payments for exploration and evaluation
Net cash from operating activities
Cash flows from investing activities
Payments for term deposit and cash reserve
Payments for exploration and evaluation assets
Payments for property, plant and equipment
Payments for construction in progress
Payments for investments
Payments for other non-current assets
Payments for additional interest/acquisition of controlled
entity
Advance payments for Oracle construction
Cash on acquisition of controlled entity
Advancement of loan monies
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Costs of issue
Dividend distributions
Payments for cash reserve amount
Proceeds from borrowings, net of borrowing costs
Repayment of borrowings
Payment of interest charges
Payment of financing expenses
Distributions to non-controlling interest
Contributions by non-controlling interest
Net cash from financing activities
Net increase in cash and cash equivalents
Effect of exchange rate adjustments on cash held
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Non-cash financing and investing activities:
Notes
31 December 2023
$
31 December 2022
$
20
6
17
8
18
18
18
8
16
16
16
6
20(c)
20(c)
5
1,763,110,738
(1,485,241,508)
11,729,421
(56,359,558)
(3,483,240)
229,755,853
1,203,312,931
(1,079,763,371)
1,007,513
(58,165,488)
(3,348,413)
63,043,172
(490,913,669)
(24,884,921)
(19,109,620)
(179,880,251)
(341,300,000)
(15,000,000)
-
-
(9,393,090)
(110,378,195)
-
-
(75,000,000)
(235,000,000)
-
-
(7,000,000)
(1,153,088,461)
(81,200,000)
7,959,574
(2,000,000)
(430,011,711)
828,929,850
(8,445,651)
(85,569,052)
(3,839,438)
580,530,280
(315,482,000)
(51,008,068)
(18,476,640)
(38,851,162)
173,380,988
1,061,169,107
137,836,499
1,974,639
144,242,357
106,000,000
(2,486,308)
(72,724,697)
-
230,296,561
(5,600,000)
(26,750,000)
-
(28,131,293)
172,550,000
373,154,263
6,185,724
194,675
137,861,958
284,053,495
144,242,357
The acquisition of an investment disclosed in Note 17 included a non-cash transaction of $270,000,000 which was
funded through the issue of $270,000,000 in shares.
Non-cash investing activities
Payment for acquisition of interest in equity accounted
investee
Payment for acquisition of controlled entity
Total non-cash investing activities
-
270,000,000
(106,000,000)
(106,000,000)
(270,000,000)
17
-
Non-cash financing activities
Proceeds from issue of shares
Total non-cash investing activities
16
270,000,000
270,000,000
106,000,000
106,000,000
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
42
Nickel Industries Annual Report 2023
Notes to the Consolidated
Financial Statements
For the year ended 31 December 2023
NOTE 1 - REPORTING ENTITY
Nickel Industries Limited (the ‘Company’) is a company domiciled in Australia. The consolidated financial report for the
year ended 31 December 2023 comprises the Company and its subsidiaries (together referred to as the ‘Group’). The
Group is a for-profit entity and is involved in nickel ore mining, nickel pig iron and nickel matte production operations
and now the production of mixed hydroxide precipitate for use in the electric vehicle supply chain.
NOTE 2 - BASIS OF PREPARATION
Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with Australian
Accounting Standards (‘AASBs’) adopted by the Australian Accounting Standards Board (‘AASB’) and the Corporations
Act 2001. The consolidated financial report of the Group complies with International Financial Reporting Standards
(‘IFRS’) and interpretations adopted by the International Accounting Standards Board (‘IASB’).
The financial report was authorised for issue by the Directors on 29 February 2024.
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for certain financial
instruments which are measured at fair value.
Functional and presentation currency
These consolidated financial statements are presented in United States dollars, which is the Company’s functional currency.
Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future
periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amount recognised in the financial statements are
described in the following notes:
• Note 11 – Income tax expense and the recoverability of deferred tax assets: The Group only recognised deferred
tax assets where it’s expected that the availability of future taxable profit against which deductible temporary
differences and tax losses carried forward can be utilised.
• Note 12 – Depreciation of property, plant and equipment. The Group allocates depreciation expenses to its property,
plant, and equipment based on their assessed useful lifespans, which involves estimating the appropriate duration.
• Note 13 – Exploration and evaluation assets: The Group capitalises expenditures relating to exploration and
evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which
permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which
no reserves have been extracted, the Directors are of the belief that such expenditure should not be written off since
feasibility studies in such areas have not yet concluded.
• Note 17 – Investments in equity accounted investees: The Group exerts judgements related to the determination of
the level of influence exercisable over the investees.
• Note 17 – Intangible assets: The Group determined the fair value of the intangible asset acquired in relation to
HNC by reference to a discounted cash flow model related to the expected contractual cashflows to be received
associated with the right to offtake. This intangible asset is amortised over a period which management has
assessed with reference to the expected life of the underlying plant and equipment of the project.
• Note 18 – Impairment of carrying values of cash generating units (CGUs) including goodwill: The Group assesses
impairment at the end of each reporting period for each CGU by evaluating conditions and events specific to the
Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using
the higher of fair value less costs of disposal or value-in-use calculations which incorporate various key assumptions.
The preparation of annual impairment models involves the use of key estimates.
• Note 18 – Controlled entities and business combinations: The Group estimates the fair value of the consideration
transferred, and fair value of the assets acquired and liabilities assumed, measured on a provisional basis.
In forming views on these significant areas of estimation uncertainty, management have also had regard to the broader
macroeconomic environment. In particular, the current year saw nickel prices fall considerably as the supply of nickel
from Indonesia continued to increase and the market forecast further increasing supply, as well as a slower than expected
growth in the EV sales. Management have had regard to these factors when assessing the short-term to medium-term
outlook for nickel pricing, and the impacts this may have on financial performance of the Group as a result.
Annual Report 2023 Nickel Industries
43
Notes to the Consolidated
Financial Statements
For the year ended 31 December 2023
NOTE 3 - MATERIAL ACCOUNTING POLICIES
Basis of consolidation
Business combinations
The Group accounts for business combinations using the acquisition method when the acquired set of activities and
assets meets the definition of a business and control is transferred to the Group. In determining whether a particular set
of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a
minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.
The Group has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired set
of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the
gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets
acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in
profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity
securities.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such
amounts are generally recognised in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent
consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and
settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each
reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that
control commences until the date that control ceases.
Non-controlling interest
The Group measures any non-controlling interest at its proportionate interest in the identifiable net assets of the
acquiree. Acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity
as equity holders and therefore no goodwill is recognised as a result of such transactions.
Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions,
are eliminated in preparing the consolidated financial statements. Where a controlled entity issues shares to minority
interests which does not result in loss of control by the Group, any gain or loss arising on the Group’s interest in the
controlled entity is recognised directly in equity.
Investments in equity-accounted investees
The Group’s interests in equity-accounted investees comprise interests in associates.
Associates are those entities in which the Group has significant influence, but not control or joint control, over the
financial and operating policies. A joint venture is an arrangement in which the Group has joint control, whereby the
Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities.
Interests in associates and joint ventures are accounted for using the equity method. They are recognised initially at
cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include
the Group’s share of the profit or loss and other comprehensive income of equity-accounted investees, until the date on
which significant influence or joint control ceases.
Nickel ore and nickel pig iron and nickel matte sales revenue
Saprolite and limonite nickel ore, low grade matte and nickel pig iron sales revenue is measured based on the
consideration specified in a contract with a customer. The Group recognises revenue when it transfers control over
goods or a service to a customer, based on the seller’s loading position.
Invoices for saprolite nickel ore sales are generated on a per barge basis and are usually payable within 10 working days.
Limonite ore sales were on the same basis but following the completion of the haul road from September 2023 invoicing
for limonite ore is now done on a monthly basis.
44
Nickel Industries Annual Report 2023
Notes to the Consolidated
Financial Statements
For the year ended 31 December 2023
NOTE 3 - MATERIAL ACCOUNTING POLICIES (CONTINUED)
Invoices for sales of nickel pig iron within the Indonesia Morowali Industrial Park (IMIP) in Indonesia (Hengjaya Nickel,
Ranger Nickel and Oracle Nickel) are generated at the end of each month of production, based on a pricing formula
referencing the average nickel pig iron price on the Shanghai Metal Exchange of the delivery month. Payment is due
within one month from the last delivery in the month.
Invoices for sales of low grade nickel matte within the IMIP (Hengjaya Nickel) are generated at the end of each month
of production, based on a pricing formula referencing the average nickel price on the London Metal Exchange of the
delivery month. A down payment of 85% is made against the original contract amount, with the final settlement amount
paid with reference to the invoice raised at the end of the delivery month.
Invoices for sales of nickel pig iron exported from the Indonesia Weda Bay Industrial Park in Indonesia (Angel Nickel) are
generated based on the loading inspection report and a final invoice is issued based on the nickel content delivered,
following receipt of third party assay results. The price is based on average nickel pig iron price on the Shanghai Metal
Exchange of the month prior to delivery. A 20% upfront payment is made prior to shipment based on a provisional
contract with the price based on the ten day average of the Shanghai Metal Exchange prior to delivery, with the balance
usually payable within 60 days.
Invoices for high grade nickel matte sales were generated once a month, originally on a provisional basis based on until
final assay results undertaken at the port of discharge have been received. When the final pricing is received, which
happens approximately three months after the original invoice any adjustment is taken up in the month in which the
amended final pricing is received.
Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to United
States dollars at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are
recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost
in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and
liabilities denominated in foreign currencies that are stated at fair value are translated to United States dollars at foreign
exchange rates ruling at the dates the fair value was determined.
The Group transacts in the following foreign currencies: Australian dollars (A$ or AUD), Indonesian Rupee (IDR) and
Singapore Dollars (SGD).
Financial statements of foreign operations
The assets and liabilities of foreign entities are translated to United States dollars at the foreign exchange rates ruling
at the reporting date. The revenues and expenses of foreign operations are translated to United States dollars at rates
using a monthly average rate for the month in which the transaction occurred. Foreign exchange differences arising
on retranslation are recognised directly in the foreign currency translation reserve (‘FCTR’), a separate component of
equity.
Foreign exchange gains and losses arising from a monetary item receivable or payable to a foreign operation, the
settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net
investment in a foreign operation and are recognised directly in the FCTR.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition,
are translated to United States dollars at exchange rates at the reporting date. The income and expenses of foreign
operations are translated to United States dollars using a monthly average rate for the month in which the transaction
occurred. When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to
profit or loss as part of the profit or loss on disposal.
At 31 December 2023, the functional currency of all components in the Group is United States dollars. The FCTR
represents the foreign exchange differences which arose on retranslation in prior years on subsidiaries which have not
yet been disposed.
Annual Report 2023 Nickel Industries
45
Notes to the Consolidated
Financial Statements
For the year ended 31 December 2023
NOTE 3 - MATERIAL ACCOUNTING POLICIES (CONTINUED)
Property, plant and equipment
Owned assets
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Construction in progress
The Group recognises plant construction in progress costs at cost in a construction in progress account. Once
construction has been completed and the plant is in service, costs recognised as construction in progress will be
transferred to the appropriate assets category within property, plant and equipment and depreciation charges will
commence.
Depreciation and amortisation
Mining properties’ amortisation rate is applied on a straight-line basis over the remaining term of the mining licence,
inclusive of the option periods to extend. The amortisation is included in the costs of conversion of inventories.
Depreciation is charged to the income statement using a reducing balance method from the date of acquisition using
the following rates:
• Furniture and fittings and plant and machinery are depreciated at 25%.
• Buildings and infrastructure are depreciated at 5%.
• Mine infrastructure assets are depreciated at 5%.
• Office equipment is depreciated at rates of between 25% and 40%.
• Plant and machinery are depreciated at rates if between 6.25% and 12.5%.
• Motor vehicles are depreciated at 25%.
Impairment
Financial assets
The Group recognises expected credit losses (‘ECLs’), where material, on financial assets measured at amortised cost.
The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured
at 12-month ECLs:
• Other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life
of the financial instrument) has not increased significantly since initial recognition.
Loss allowances for trade receivables and contract assets are measured at an amount equal to lifetime ECLs. At each
reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at fair value
through profit or loss are credit impaired.
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of
recovering a financial asset in its entirety or a portion thereof.
Non-financial assets
The carrying amounts of the Group’s assets, other than deferred tax assets and inventories, are reviewed at each
balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s
recoverable amount is estimated. Goodwill, being an indefinite life intangible asset, is subject to annual impairment
testing, in which the goodwill is allocated to a cash generating unit (‘CGU’) for impairment testing and the value-in-use is
compared to the carrying value of assets and liabilities in that CGU.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in the consolidated profit or loss and other comprehensive
income, unless an asset has previously been revalued, in which case the impairment loss is recognised as a reversal to
the extent of that previous revaluation with any excess recognised through profit or loss.
Calculation of recoverable amount
The recoverable amount of assets is the greater of their fair value less costs to sell and value in use. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. For an asset that does not
generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which
the asset belongs.
46
Nickel Industries Annual Report 2023
Notes to the Consolidated
Financial Statements
For the year ended 31 December 2023
NOTE 3 - MATERIAL ACCOUNTING POLICIES (CONTINUED)
Reversals of impairment
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Impairment charges against the carrying value of goodwill cannot be reversed.
Intangible assets
Intangible assets, including customer relationships and discounted offtake arrangements, that are acquired by
the Group and have finite useful lives are measured at cost less accumulated amortisation and any accumulated
impairment losses.
Share capital
Transaction costs
Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax
benefit.
Dividends
Dividends are recognised as a liability in the period in which they are declared.
Finance income and finance costs
The Group’s finance income and finance costs include:
•
•
interest income;
interest expense;
• dividend income;
•
•
the foreign currency gain or loss on financial assets and financial liabilities; and
the gain on the remeasurement to fair value of any pre-existing interest in an acquiree in a business combination.
Interest income or interest expense is recognised using the effective interest method. Dividend income is recognised in
profit or loss on the date on which the Group’s right to receive payment is established.
The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts through the
expected life of the financial instrument to:
•
•
the gross carrying amount of the financial asset; or
the amortised cost of the financial liability.
In calculating interest income and interest expense, the effective interest rate is applied to the gross carrying amount
of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial
assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying
the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the
calculation of interest income reverts to the gross basis.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in the income statement over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
Income tax
Income tax on the income statement for the year comprises current and deferred tax. Income tax is recognised in
the income statement except to the extent that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Annual Report 2023 Nickel Industries
47
Notes to the Consolidated
Financial Statements
For the year ended 31 December 2023
NOTE 3 - MATERIAL ACCOUNTING POLICIES (CONTINUED)
The following temporary differences are not provided for:
• The initial recognition of assets or liabilities that affect neither accounting nor taxable profit and differences relating
to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to
pay the related dividend.
Goods and services tax and Value Added Tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (‘GST’) or value added
tax (‘VAT’), except where the amount of GST or VAT incurred is not recoverable from the taxation authority. In these
circumstances, the GST or VAT is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST or VAT included. The net amount of GST or VAT
recoverable from, or payable to taxation authorities is included as a current asset or liability in the statement of financial
position.
Cash flows are included in the statement of cash flows on a gross basis. The GST or VAT components of cash flows
arising from investing and financing activities which are recoverable from, or payable to taxation authorities are
classified as operating cash flows.
Employee benefits
Wages, salaries, annual leave, sick leave and non-monetary benefits
Liabilities for employee benefits for wages, salaries, annual leave and sick leave that are expected to be settled within
12 months of the reporting date represent present obligations resulting from employees’ services provided to reporting
date, are calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to
pay as at reporting date including related on-costs, such as workers compensation insurance and payroll tax.
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on average costs
over the relevant period of production, and includes expenditure incurred in acquiring the inventories, production or
conversion costs and other costs incurred in bringing them to their existing location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
48
Nickel Industries Annual Report 2023
Notes to the Consolidated
Financial Statements
For the year ended 31 December 2023
NOTE 3 - MATERIAL ACCOUNTING POLICIES (CONTINUED)
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.
If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability.
It has been assessed that no such obligations exist presently in relation to the Company’s RKEF operations which are
undertaken within the confines of the IMIP and IWIP.
Site restoration
In accordance with the Group’s environmental policy and applicable legal requirements, a provision for site restoration
in respect of disturbed land, and the related expense, is recognised when the land is disturbed. Site restoration and
rehabilitation at the Company’s Hengjaya Mine is conducted on a continual basis and as mining operations move
from one area of operation to the next. Additionally, under the Company’s forestry licence obligations pursuant to the
Company being granted access to new areas, the Company is then obliged to plant equivalent acreage of new forest in
an area designated by the local Indonesian authorities (DAS/Watershed management).
Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial
and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes
by refencing the acquisition cost of assets and liabilities on the date of acquisition and if available the findings of
Independent Expert’s Reports who prepared a valuation on a recent comparable transaction basis. Where applicable,
further information about the assumptions made in determining fair values is disclosed in the notes specific to that
asset or liability.
Exploration, evaluation and development expenditure
Exploration and evaluation costs, including the costs of acquiring licences, are capitalised at cost or fair value, as
exploration and evaluation assets on an area of interest basis. Costs incurred before the Group has obtained the legal
rights to explore an area are recognised in the statement of comprehensive income.
Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either:
•
the expenditures are expected to be recouped through successful development and exploitation of the area of
interest; or
• activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable
assessment of the existence or other wise of economically recoverable reserves and active and significant
operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical feasibility
and commercial viability and facts and circumstances suggest that the carrying amount exceeds the recoverable
amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating
units to which the exploration activity relates. The cash generating unit shall not be larger than the area of interest.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are
demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment
and then reclassified from exploration and evaluation expenditure to mining property and development assets within
property, plant and equipment.
Annual Report 2023 Nickel Industries
49
Notes to the Consolidated
Financial Statements
For the year ended 31 December 2023
NOTE 3 - MATERIAL ACCOUNTING POLICIES (CONTINUED)
Financial instruments
Non-derivative financial assets
The Group initially recognises loans and receivables on the date that they are originated. All other financial assets
(including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the
Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially
all the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial
assets that is created or retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the Statement of Financial Position when, and
only when, the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realise
the asset and settle the liability simultaneously.
On initial recognition, a financial asset is classified as measured at:
• amortised cost;
•
•
fair value through other comprehensive income (‘FVOCI’) – equity investment; or
fair value through profit or loss (‘FVTPL’).
Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business
model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first
reporting period following the change in the business model.
A financial asset is measured at amortised cost if it meets both the following conditions and is not designated as fair
value through profit or loss if:
•
•
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present
subsequent changes in the investment’s fair value through other comprehensive income. This election is made on an
investment-by-investment basis.
All financial assets not classified as measured at amortised cost or fair value through other comprehensive income as
described above are measured at fair value through profit or loss. This includes all derivative financial assets. On initial
recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be
measured at amortised cost or at fair value through other comprehensive income as at fair value through profit or loss if
doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Subsequent measurement and gains and losses
Financial assets at amortised cost
Equity instruments at FVOCI
These assets are subsequently measured at amortised cost using the effective
interest method. The amortised cost is reduced by impairment losses. Interest
income, foreign exchange gains and losses and impairment are recognised in
profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
These assets are subsequently measured at fair value. Dividends are
recognised as income in profit or loss unless the dividend clearly represents a
recovery of part of the cost of the investment. Other net gains and losses are
recognised in other comprehensive income and are never reclassified to profit
or loss.
Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and losses,
including any interest or dividend income, are recognised in profit or loss.
50
Nickel Industries Annual Report 2023
Notes to the Consolidated
Financial Statements
For the year ended 31 December 2023
NOTE 3 - MATERIAL ACCOUNTING POLICIES (CONTINUED)
Changes in material accounting policies
All new standards and interpretations effective for periods commencing 1 January 2023 have been adopted by the
Group in the preparation of these financial statements The policy for recognising and measuring income taxes has been
impacted by the below:
The OECD released Global Anti-Base Erosion Model Rules for a global minimum tax that is expected to be used by
individual jurisdictions which seeks to apply a 15% global minimum tax effective for income years commencing on or
after 1 January 2024. Legislation to effect these changes is at varying stages of consultation and enactment in Australia,
Singapore and Indonesia where the Group primarily operates.
The Group has adopted AASB 2023-2 Amendments to Australian Accounting Standards – International Tax Reform
– Pillar Two Model Rules which provides a temporary mandatory exception from deferred tax accounting effective
immediately. When implemented the Company may be within scope of the proposed rules, given its operations and
arrangements in Singapore and Indonesia. It is noted that the Company’s subsidiaries have been granted material tax
concessions in Indonesia. Refer to Note 11 which outlines this further.
The Company is in the process of evaluating the potential implications of the Pillar Two global minimum tax rules under
IAS12. Recognition of any impact will only occur once legislation has been substantively enacted.
The Group also adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
from 1 January 2023. Although the amendments did not result in any changes to the accounting policies themselves,
they impacted the accounting policy information disclosed in the financial statements. The amendments require
the disclosure of ‘material’, rather than ‘significant’, accounting policies. The amendments also provide guidance
on the application of materiality to disclosure of accounting policies, assisting entities to provide useful, entity-
specific accounting policy information that users need to understand other information in the financial statements.
Management reviewed the accounting policies and made updates to the information disclosed in Note 3 Material
accounting policies (2022: Significant accounting policies) in certain instances in line with the amendments.
New standards and interpretations
A number of new standards, amendments to standards and interpretations are able to be early adopted for annual
periods beginning after 1 January 2023 and have not been applied in preparing these consolidated financial statements.
None of these are expected to have a significant effect on the financial statements of the Group.
NOTE 4 - OTHER EXPENSES
Audit fees – KPMG audit of financial reports
Travel
Legal fees
Withholding tax expense
Other
31 December 2023
$
31 December 2022
$
656,463
590,050
1,726,813
32,819,436
3,079,051
38,871,813
405,711
411,884
684,774
18,228,093
2,980,149
22,710,611
Annual Report 2023 Nickel Industries
51
Notes to the Consolidated
Financial Statements
NOTE 5 - FINANCIAL INCOME AND FINANCE
EXPENSE
Interest income
Interest expense*
Net change in fair value of investment in associate
Foreign exchange gain/(loss)
Financing expenses^
31 December 2023
$
31 December 2022
$
13,520,610
1,007,513
(69,101,465)
(33,767,809)
-
(3,319,311)
(18,476,640)
(77,376,806)
(404,812)
(8,671,422)
-
(41,836,530)
*
^
Includes bond and debt issue costs of $12,641,373 which are being expensed under the effective interest rate method. Refer to Note 15 for
further details.
As detailed in Note 15, during the period the Company completed a $400M issuance of senior unsecured notes, and at the same time
purchased and cancelled the Company’s $225M senior secured notes and completed a tender offer for $80.082M of the $325M senior
unsecured notes maturing in April 2024, with the costs associated with the repurchasing shown above.
NOTE 6 – TERM DEPOSITS AND CASH RESERVE
Term deposits*
Cash reserve amount^
490,913,669
3,839,438
494,753,107
-
-
-
*
^
The Company holds $490,913,669 in term deposits with an Australian bank. As the term of the deposits are greater than 90 days the
amounts have been reclassified from cash and cash equivalents. Interest accrued on the term deposits at 31 December 2023 was
$952,887.
Under the terms of the Company’s bank facility with PT Bank Negara Indonesia (Persero) Tbk (BNI), the Company is required to hold a Debt
Service Reserve Amount (DSRA), equivalent to an estimated three months of interest, with BNI.
52
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
31 December 2023
$
31 December 2022
$
41,175,913
287,329,936
328,505,849
101,374,795
101,374,795
65,281,833
170,335,881
235,617,714
-
-
NOTE 7 – TRADE AND OTHER RECEIVABLES
Current
Sales taxes receivable*
Trade receivables^
Non-current
Sales taxes receivable*
*
^
The four RKEF entities have the following sales tax receivable (VAT) amounts outstanding at 31 December 2023: PT Hengjaya Nickel
Industry $8.0M, PT Ranger Nickel Industry $3.0M, PT Angel Nickel Industry $73.5M and PT Oracle Nickel Industry $57.9M. PT Hengjaya
Nickel Industry and PT Ranger Nickel Industry are receiving VAT refunds regularly in the normal course of operations. The VAT claims for
PT Angel Nickel Industry for the years 2021 ($12.1M) and 2022 ($39.3M) have been submitted to the Indonesian taxation authorities on an
annual basis. The non-current portion has been determined with reference to expected timing to receive based on the Group’s current
understanding of Government processing times.
Trade receivables are in the ordinary course of business and at 31 December 2023 are comprised as follows: PT Hengjaya Mineralindo
$17.3M (excludes saprolite ore receivables which are eliminated on consolidation), PT Hengjaya Nickel Industry $54.3M, PT Ranger Nickel
Industry $39.1M, PT Angel Nickel Industry $66.4M and PT Oracle Nickel Industry $110.2M.
NOTE 8 - OTHER ASSETS
Current
Prepayments
Interest receivable*
35,807,947
2,103,421
37,911,368
47,440,071^
353,458
47,793,529
^
Includes $39.8M of prepaid value added taxes (VAT) at the Oracle Nickel project, which has now been transferred to sales tax receivable.
Non-current
Prepayments
Loans*
Other
Advance payment^
12,431,157
12,500,000
1,311,452
15,000,000
41,242,609
8,466,970
5,500,000
1,196,017
-
15,162,987
*
^
Commencing in August 2021 the Company executed a series of facility agreements with PT Sinar Inti Pembangunan (‘PT SIP’) and the
Company’s Indonesian partner at the Hengjaya Mine Adi Wijoyo, under which the Company has advanced funds to PT SIP to assist in
funding the development and eventual acquisition of the Sampala project (formerly the ANN and SNA projects). In August 2021 the
Company advanced $3.5M to PT SIP. Interest is calculated at a rate of 8.5% p.a. The loan is secured and management assessed that
no provision for impairment is required. In July 2022 the Company advanced to PT SIP an additional $2.0M to further advance the
development of the Sampala project. Interest is calculated at a rate of 10.0% p.a. In April 2023 the Company advanced an additional
$2.0M and in August 2023 advanced an additional $5.0M, bringing the total funds advanced to develop the project to $12.5M. Interest is
calculated at a rate of 10.0% p.a.
Option to invest in and construct a low-grade to high-grade nickel matte converter at Oracle Nickel.
Annual Report 2023 Nickel Industries
53
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 9 - INVENTORY
Current
Inventory – Hengjaya mine nickel ore stockpiles
Inventory – nickel pig iron production raw materials
Inventory – nickel matte production raw materials
Inventory – nickel pig iron
Inventory – nickel matte
Non-current
Inventory – Hengjaya mine nickel ore stockpiles*
31 December 2023
$
31 December 2022
$
23,589,678
119,985,773
27,420,805
20,461,078
7,991,131
12,455,365
113,665,821
38,677,924
30,803,925
9,242,264
199,448,465
204,845,299
12,667,046
12,667,046
-
-
*
The carrying value of limonite ore not forecast to be delivered in the next 12 months has been classified as non-current.
During the year ended 31 December 2023, the Company’s 80% subsidiary PT Hengjaya Mineralindo supplied nickel
saprolite ore to the Company’s subsidiaries PT Hengjaya Nickel Industry, PT Oracle Nickel Industry and PT Ranger
Nickel Industry under monthly contracts to supply a minimum of between 80,000 to 100,000 wmt per month to each
entity for the year ended 31 December 2023. During 2023 PT Hengjaya Mineralindo also the supplied limonite ore to the
HNC and QMB HPAL projects operating within the IMIP.
Nickel pig iron production raw materials includes nickel ore acquired by PT Hengjaya Nickel Industry, PT Oracle Nickel
Industry and PT Ranger Nickel Industry from PT Hengjaya Mineralindo, operator of the Hengjaya Mine. This continues to
be valued at the PT Hengjaya Mineralindo cost of production.
Inventories are measured at the lower of cost and net realisable value.
NOTE 10 - PROFIT PER SHARE
Basic and diluted profit per share have been calculated using:
Net profit for the year attributable to equity holders of the Company
121,597,563
158,978,977
Weighted average number of ordinary shares (basic and diluted)
Issued ordinary shares at the beginning of the year
2,731,273,497
2,515,029,051
N° of shares
N° of shares
- Effect of shares issued on 15 February 2022
- Effect of shares issued on 4 May 2022
- Effect of shares issued on 24 January 2023
- Effect of shares issued on 3 March 2023
- Effect of shares issued on 28 July 2023
- Effect of shares issued on 3 August 2023
- Effect of shares issued on 22 September 2023
-
-
94,792,086
71,686,515
242,776,562
28,217,975
9,113,303
158,597,835
237,142,466
-
-
-
-
-
Weighted average number of shares at the end of the year
3,407,121,639
2,681,507,652
54
Nickel Industries Annual Report 2023
For the year ended 31 December 2023
Notes to the Consolidated
Financial Statements
31 December 2023
$
31 December 2022
$
NOTE 11 - INCOME TAX EXPENSE
Profit before tax – continuing operations
203,291,208
217,045,933
Prima facie income tax expense/(benefit) at the Australian tax rate of
30% (31 December 2022: 30%)
60,987,362
65,113,780
Increase in income tax expense/(benefit) due to:
- Effect of tax rates in foreign jurisdictions*
(54,814,353)
(60,700,136)
- Effect of change in tax rates in foreign jurisdictions
- Non-deductible/non-assessable income
- Effect of deferred tax assets for tax losses not brought to account
- Effect of net deferred tax assets not brought to account
- Effect of foreign currency conversion
Income tax expense – current and deferred
-
22,298,662
(7,880)
(857,644)
(518,315)
27,087,832
(6,648,588)
11,679,113
(258,481)
(1,314,511)
(192,854)
7,678,323
*
The current Indonesian company tax rate is 22% but each of the Company’s four RKEF projects currently operate under a holiday from
Indonesian Company income tax.
Deferred tax liabilities have been recognised in respect of the
following items:
Opening balance
Net deductible temporary differences – property, plant and equipment*
Net deductible temporary differences – change as a result of change in
effective Indonesian income tax rate
*
See Note 16 for further details.
Deferred tax assets have not been recognised in respect of the
following items:
Net deductible temporary differences
Tax losses
96,099,816
-
-
77,982,164
24,766,240
(6,648,588)
96,099,816
96,099,816
1,588,031
11,239,486
12,827,517
2,483,529
3,956,401
6,439,930
The deductible temporary differences and tax losses do not expire under the current tax legislation. Deferred tax assets
have not been recognised in respect of these items because it is not probable that future taxable profit will be available
against which the Company can utilise the benefits of the deferred tax asset. The Company does not have any franking
credits.
Current tax payable:
Income taxes payable
Indirect taxes payable
Value added taxes payable
Withholding taxes payable
Other taxes payable
21,264,936
15,345,721
1,792,249
1,725,042
1,310,019
2,627,201
2,057,747
1,213,967
26,092,246
21,244,636
Annual Report 2023 Nickel Industries
55
For the year ended 31 December 2023
Notes to the Consolidated
Financial Statements
NOTE 12 - PROPERTY, PLANT AND EQUIPMENT
31 December 2023
$
31 December 2022
$
Furniture and fittings
Furniture and fittings – cost
Accumulated depreciation
Net book value
Mine infrastructure assets
Mine infrastructure assets – cost
Accumulated depreciation
Net book value
Buildings and land
Buildings – cost
Accumulated depreciation
Net book value
Mining properties
Mining properties – cost
Accumulated amortisation
Net book value
Office equipment
Office equipment – cost
Accumulated depreciation
Net book value
Plant and machinery
Plant and machinery – cost
Accumulated depreciation
Net book value
Motor vehicles
Motor vehicles – cost
Accumulated depreciation
Net book value
Construction in progress
Construction in progress
Accumulated depreciation
Net book value
627,671
(450,878)
176,793
598,794
(322,372)
276,422
33,926,262
(2,765,748)
31,160,514
7,554,900
(1,900,478)
5,654,422
360,046,559
209,661,399
(32,958,469)
(16,750,444)
327,088,090
192,910,955
34,490,356
(9,397,582)
25,092,774
32,027,200
(7,790,425)
24,236,775
2,377,321
(1,511,019)
866,302
1,922,007
(1,131,359)
790,648
1,680,189,315
1,123,005,501
(228,432,408)
(137,915,287)
1,451,756,907
985,090,214
1,125,289
(713,330)
411,959
1,018,406
(625,403)
393,003
217,759
712,756,965
-
-
217,759
712,756,965
Total property, plant and equipment
1,836,771,098
1,922,109,404
56
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 12 - PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Impairment
The Directors have completed impairment assessments over the carrying value of the Group’s property, plant and
equipment assets at 31 December 2023, and concluded that no impairment charged is warranted. Further details on the
impairment testing of the cash generating units which contain goodwill is outlined in Note 18.
Reconciliations of the carrying amounts for each class of property, plant and equipment are set out
below.
31 December 2023
$
31 December 2022
$
Furniture and fittings
Carrying amount at beginning of year
Additions
Depreciation
Net book value
Mine infrastructure assets
Carrying amount at beginning of year
Additions
Transfer
Depreciation
Net book value
Buildings and land
Carrying amount at beginning of year
Additions
Depreciation
Net book value
Mining properties
Carrying amount at beginning of year
Additions
Disposal
Amortisation
Net book value
Office equipment
Carrying amount at beginning of year
Additions
Depreciation
Net book value
Plant and machinery
Carrying amount at beginning of year
Additions
Depreciation
Net book value
276,422
28,877
(128,506)
176,793
5,654,422
26,371,362
-
(865,270)
31,160,514
148,559
282,539
(154,676)
276,422
8,425,176
2,166,327
(4,645,131)
(291,950)
5,654,422
192,910,955
150,385,160
57,449,633
143,413,512
(16,208,025)
(7,952,190)
327,088,090
192,910,955
24,236,775
2,463,154
-
(1,607,155)
25,092,774
790,648
455,314
(379,660)
866,302
25,416,384
703,266
(18,916)
(1,863,959)
24,236,775
680,495
466,520
(356,367)
790,648
985,090,214
557,183,813
478,568,971
562,786,616
(90,517,120)
(56,265,373)
1,451,756,907
985,090,214
Annual Report 2023 Nickel Industries
57
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 12 - PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
31 December 2023
$
31 December 2022
$
Motor vehicles
Carrying amount at beginning of year
Additions
Depreciation
Net book value
Construction in progress
Carrying amount at beginning of year
Additions
Additions arising from business combination*
Transfers^
Net book value
393,003
214,818
(195,862)
411,959
335,027
249,711
(191,735)
393,003
712,756,965
39,882,355
-
693,257,566
83,871,205
515,164,044
(752,421,561)
(579,535,850)
217,759
712,756,965
Total property, plant and equipment
1,836,771,098
1,922,109,404
*
^
Additions arising from business combinations in 2022 relate to the acquisition of Oracle Development Private Limited on 27 September
2022.
Balances in construction in progress are transferred into other categories, as additions, on commissioning of projects, or when available
for use in a manner in which management intended.
58
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
31 December 2023
$
31 December 2022
$
3,246,611
21,638,310
24,884,921
-
-
-
NOTE 13 – EXPLORATION AND EVALUATION ASSETS
Sampala project
Siduarsi project
The Company is advancing the exploration, development and acquisition of both the Sampala and Siduarsi nickel ore
projects in, Indonesia. The recoverability of the carrying amount of the exploration and evaluation assets is dependent
on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.
NOTE 14 - TRADE AND OTHER PAYABLES
Current
Creditors
Accruals
Other
NOTE 15 - BORROWINGS
Current
Senior Unsecured Notes – April 2024
Interest on Senior Unsecured Notes – October 2028
Interest on Senior Unsecured Notes – April 2024
Interest on Senior Secured Notes
Bank facility interest
Non-current
Senior Unsecured Notes – October 2028
Senior Unsecured Notes – April 2024
Senior Secured Notes – August 2025
Working Capital Loan – September 2025
Interest on Working Capital Loan – September 2025
Bank Facility – October 2028
175,627,034
170,068,973
12,257,929
4,873,962
6,052,742
1,063,449
192,758,925
177,185,164
244,345,619
8,750,000
3,979,918
-
193,911
-
-
5,281,250
2,491,438
-
257,269,448
7,772,688
393,406,866
-
-
7,800,000
203,320
186,343,794
587,753,980
-
321,283,009
216,456,370
13,400,000
376,051
-
551,515,430
Senior Unsecured Notes October 2028
In April 2023, as part of a refinancing to extend the Company’s debt maturity profile, the Company made an issue of
$400,000,000 senior unsecured notes (‘Senior Unsecured Notes October 2028’). At the same time the Company made
a tender offer (‘Concurrent Tender Offer’) for its existing Senior Unsecured Notes (maturing April 2024) and purchased
the outstanding $225,000,000 of Senior Secured Notes. Key terms of the Senior Unsecured Notes October 2028 are as
follows:
•
Issue size of $400,000,000.
• Coupon interest rate of 11.25% per annum.
•
•
Interest is payable on a semi-annual basis in arrears.
11% amortisation in April and October each year commencing on 21 October 2025.
• Final Maturity Date of 21 October 2028.
Annual Report 2023 Nickel Industries
59
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 15 - BORROWINGS (CONTINUED)
Senior Unsecured Notes April 2024
In March 2021, as part of the financing package to facilitate the Company’s acquisition of an 80% interest Angel Nickel
project the Company made an inaugural issue of $175,000,000 senior unsecured notes (‘Senior Unsecured Notes’). This
was followed in September 2021 of a $150,000,000 ‘tap’ of the notes, forming a $325,000,000 single series of notes. Key
terms of the Senior Unsecured Notes are as follows:
•
Issue size of $325,000,000.
• Coupon interest rate of 6.5% per annum.
•
Interest is payable on a semi-annual basis in arrears.
• Principal to be repaid at Final Maturity Date of 1 April 2024.
• Total transaction costs for both the inaugural issue and the ‘tap’ issue totalled $8,155,857.
Under the Concurrent Tender Offer the Company accepted valid tenders for an aggregate principal amount of
$80,082,000 of the Senior Unsecured Notes April 2024 at a purchase price equal to 102% of the principal amount of the
Notes, reducing the principal balance of the notes to $244,918,000.
Senior Secured Notes
In August 2022, to facilitate the Company’s acquisition of a 70% interest Oracle Nickel project the Company completed
the issuance of $225,000,000 senior secured notes (‘Senior Secured Notes’). Key terms of the Senior Secured Notes
are as follows:
•
Issue size of $225,000,000.
• Coupon interest rate of 10.0% per annum.
•
Interest is payable on a quarterly basis in arrears.
• Principal to be repaid at Final Maturity Date of 23 August 2025.
• Total transaction costs totalled $9,703,439.
As part of the refinancing via the issuance of the Senior Unsecured Notes October 2028 the Company purchased the
$225,000,000 of Senior Secured Notes. The notes were purchased at a tender premium to the principal amount of the
Notes and then were cancelled and ceased to be outstanding.
Bank Facility
In October 2023 the Company executed financing facilities totalling $400,000,000 with Indonesian bank PT Bank
Negara Indonesia (Persero) Tbk (BNI) to support the Company’s funding obligations in relation to the ENC Project.
The facilities comprise a 5-year senior term loan facility (‘the Facility’) of $350,000,000, split across two tranches:
•
•
tranche A: $200,000,000 (secured against the Company’s Angel Nickel Project and the Shareholder Loans); and
tranche B: $150,000,000 (unsecured).
In addition, the Company has secured a $50M revolving credit facility (‘RCF’), for general working capital purposes.
The interest rate applicable on the Facility is a margin above the Secured Overnight Financing Rate (‘SOFR’) (currently
~5.3%), according to the following schedule: (i) initial 12-month period: 2.00% (ii) months 12 -18: 3.00% and (iii) 18 months
onwards: 3.50%.
The margin applicable to the RCF is 3.00%. Repayments of both tranche A and tranche B are to commence 18 months
after the signing of the Facility Agreement (i.e. in April 2025), with 6.3% to be paid every three months until the final
maturity date of the Facility in October 2028.
On 27 December 2023 the Company drew down $189,800,000 against tranche A of the Facility. Transaction costs
totalled $3,474,857.
60
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 15 - BORROWINGS (CONTINUED)
Angel Nickel working capital loans
Commencing in December 2021 the indirect shareholders of Angel Nickel, Nickel Industries and Decent Resource
Limited (‘Decent Resource’) an associate of Shanghai Decent, provided working capital loans to Angel Nickel totalling
$80 million ($20 million prior to 31 December 2021) to fund operations through the ramp-up commissioning phase of
operations. These loans are proportionate to the shareholders interest in Angel Nickel; i.e. Nickel Industries provided
80% of the total amount, $64 million and Decent Resource provided 20%, $16 million. Interest was charged at a rate of
2.5% per annum. In December 2022 Angel Nickel commenced repayment of the working capital loans, with $22.4 million
paid to the Company and $5.6 million to Decent Resource. During the year ended 31 December 2023 the remaining
balance of the working capital loans was repaid by Angel Nickel, with $41.6 million paid to the Company and $10.4 million
paid to Decent Resource. Additionally, $1,707,684 of interest on the working capital loans was paid to the Company and
$430,669 of interest was paid to Decent Resource.
Oracle Nickel working capital loans
Commencing in October 2022, the indirect shareholders of Oracle Nickel, Nickel Industries and Decent Resource,
have provided working capital loans to Oracle Nickel totalling $26 million to fund operations through the ramp-up
commissioning phase of operations ($10 million prior to 31 December 2022). These loans are proportionate to the
shareholders interest in Oracle Nickel at the time the loans were provided; i.e. Nickel Industries provided 70% of the
total amount, $18.2 million ($7 million in 2022) and Decent Resource provided 30%, $7.8 million ($3 million in 2022).
Interest is charged at a rate of 2.5% per annum. Total interest payable by Oracle Nickel on the working capital loans
is $708,990, with $495,710 payable to the Company eliminating on consolidation and $213,280 payable to Decent
Resource. The term of the loan is 3 years.
The terms and conditions of the outstanding borrowings are as follows:
Nominal
interest
rate
Year of
maturity
Currency
Carrying
Value
31
December
2023
$
Face
Value
31
December
2023
$
Carrying
Value
31
December
2022
$
Face
Value
31
December
2022
$
US$
6.5%
2024
248,325,536
244,918,000
326,564,259
325,000,000
US$
10.0%
2025
-
-
218,947,808
225,000,000
US$
11.25%
2028
402,156,866
400,000,000
7.36%
2028
186,537,706
189,800,000*
-
-
-
-
2.5%
2024
-
-
10,756,688
10,400,000
2.5%
2025
8,003,320
7,800,000
3,019,363
3,000,000
845,023,428
842,518,000
559,288,118
563,400,000
Senior
Unsecured
Notes
Senior Secured
Notes
Senior
Unsecured
Notes
Bank Facility
Angel working
capital loan
Oracle working
capital loan
Total interest
bearing
liabilities
US$
US$
US$
* Total facility amount $400,000,000. $210,200,000 undrawn.
A number of financial and non-financial covenants exist for both the Notes and the Bank Facility. The Group has
assessed that they are in compliance with these covenants at year end.
Annual Report 2023 Nickel Industries
61
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 16 - ISSUED CAPITAL AND RESERVES
Number of shares
$
Ordinary shares on issue at 31 December 2022 - fully paid
2,731,273,497
942,442,827
Issue of shares
Costs of issue
1,554,536,383
1,098,929,850
-
(8,445,651)
Ordinary shares on issue at 31 December 2023 - fully paid
4,285,809,880
2,032,927,026
Year ended 31 December 2023
In January 2023, through a placement to institutional investors the Company issued 259,103,641 shares at A$1.02 per
share for cash totalling A$264,285,714 (equivalent to $185,740,000). There were no amounts unpaid on the shares
issued and the share issue costs amounts to $4,737,993.
In March 2023, through a Share Purchase Plan the Company issued 33,880,135 shares for cash totalling A$34,557,738
(equivalent to $23,390,208). There were no amounts unpaid on the shares issued and the share issue costs amounts to
$206,228.
In August 2023, following shareholder approval at an EGM held in July 2023, the Company issued 381,365,628 at A$1.02
per share to Decent International for a 10% interest in the HNC project. Consideration was equivalent to $270,000,000.
Additionally, also following shareholder approval the Company issued 2,000,000 shares to Director Mark Lochtenberg
and 21,186,979 shares to Shanghai Wanlu, an entity in which director Yuanyuan Xu has a beneficial interest. The
issuances were at A$1.02, equivalent to $15,717,482. There were no amounts unpaid on the shares issued and the share
issue costs amounts to $179,935.
In September 2023, through a placement to PT Danusa Tambang Nusantara, the Company issued 857,000,000 shares
at A$1.10 per share for cash totalling A$942,700,000 (equivalent to $604,082,160). There were no amounts unpaid on the
shares issued and the share issue costs amounts to $3,321,495.
Year ended 31 December 2022
In February 2022, through a placement to institutional investors the Company issued 108,122,223 shares for cash
totalling A$148,127,446 (equivalent to $106,000,000). There were no amounts unpaid on the shares issued and the share
issue costs amounts to $2,418,820.
In May 2022, following shareholder approval, the Company issued 108,122,223 shares to the nominee of Shanghai
Decent, Decent Resource, as a share-based payment for a further 20% interest in the Oracle Nickel project. This
payment was the equivalent of cash with a fair value of A$148,127,446 (equivalent to $106,000,000). There were no
amounts unpaid on the shares issued and the share issue costs amounts to $67,488.
62
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 16 - ISSUED CAPITAL AND RESERVES (CONTINUED)
Options
There were no options granted, exercised or lapsed unexercised during the years ended 31 December 2023 or 31
December 2022.
Dividends
The company paid an interim unfranked dividend of A$0.02 per share during the year and a final unfranked dividend for
2022 of A$0.02 during the year ended 31 December 2023 amounting to $85,569,052. Total dividends of A$0.04 was paid
or declared during the year ended 31 December 2023.
Ordinary shares
The Company does not have authorised capital or par value in respect of its issued shares. All issued shares are fully
paid. The holders of ordinary shares are entitled to receive dividends as declared from time to time.
Reserves
Opening balance
Remeasurement of defined benefit obligation
31 December 2023
$
31 December 2022
$
19,144,965
19,139,295
(79,025)
5,670
19,065,940
19,144,965
Annual Report 2023 Nickel Industries
63
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 17 - INVESTMENTS IN EQUITY ACCOUNTED INVESTEES AND ASSOCIATED
INTANGIBLE ASSETS
31 December 2023
$
31 December 2022
$
Investment in Equity Accounted Investee
Opening balance
HNC
Acquisition of a 10% interest in PT HNC
Share of loss of associate
Carrying value of investment in HNC
Excelsior Nickel
Acquired Option to develop Excelsior Nickel
Acquisition of a 5.5% interest in Excelsior Nickel
Acquisition of an additional 8.75% interest in Excelsior Nickel
Carrying value of investment in Excelsior Nickel
Intangible Asset
HNC
Opening balance
Acquisition of right to offtake from PT HNC
Amortisation
-
188,500,000
(2,560,590)
185,939,410
25,000,000
126,500,000
189,800,000
341,300,000
527,239,410
-
81,500,000
(1,754,785)
79,745,215
-
-
-
-
-
-
-
-
-
-
-
-
64
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 17 - INVESTMENTS IN EQUITY ACCOUNTED INVESTEES AND ASSOCIATED
INTANGIBLE ASSETS (CONTINUED)
Excelsior Nickel
During the year the Company executed an acquisition agreement (Acquisition Agreement) to acquire a 55% equity
interest in the Excelsior Nickel Cobalt HPAL project (ENC) from Decent Resource through the acquisition of shares in
a Singaporean incorporated holding company, Excelsior International Investment Pte. Ltd (EII), and shareholder loans
(Shareholder Loans) due or owning by EII (and/or its subsidiaries) (ENC Acquisition). EII directly and indirectly owns
100% of the issued share capital of PT Fajar Metal Industry, a private Indonesian company limited by shares which will
develop and own the ENC Project, being constructed at the IMIP in Indonesia. See Note 27 for details on the Company’s
obligations to acquire a 55% interest in the Project.
During the year, the Company initially paid the $25M option payment for the ENC projects and then as per the terms
of the Acquisition Agreement the Company paid US$126.5M to Shanghai Decent and its associates for an initial 5.5%
equity interest in the ENC project and in December 2023 the Company paid the $189.8M to move to a 13.75% equity
interest in the ENC project.
Whilst the Group owns less than 20 percent of the equity and present voting rights, the Group has determined that it
has significant influence because it has meaningful representation on the Board, and other rights under the Agreement.
The following table summarises the information relating to Excelsior Investment International Pte Ltd and its controlled
entities of which the Group has a 13.75% ownership interest as at 31 December 2023 under the equity method:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets (100%)
Group’s share of net assets (13.75%)
Carrying amount of interest in associate
Excelsior Investment International Pte
Ltd and its controlled entities
31 December 2023
$
31 December 2022
$
994,417
2,481,436,940
(249,539)
-
2,482,181,818
341,300,000
341,300,000
-
-
-
-
-
-
-
There has been no material profit and loss of the investee given the proximity of the Company’s acquisition to year end
and as the project is currently under construction.
Huayue Nickel Cobalt (HNC)
In August 2023, following shareholder approval at an EGM held in July 2023 the Company completed the acquisition of
an indirect 10% interest in the Huayue Nickel Cobalt HPAL project (HNC), located in the IMIP in Indonesia, through the
issuance to Shanghai Decent affiliate company Decent Investment International Private Limited 381,365,628 ordinary
shares in Company at an issue price of A$1.02, amounting to $270M. Under the acquisition agreement the Company
acquired 100% of the issued capital of Tsing Creation International Holding Limited (Tsing Creation) from Newstride
Development Limited, an affiliate of Shanghai Decent. Tsing Creation is the holder of a direct 10% interest in PT Huayue
Nickel Cobalt, the owner and operator of the HNC project.
Whilst the Group owns less than 20 percent of the equity and present voting rights, the Group has determined that it
has significant influence because it has meaningful representation on the Board, and other rights under the Agreement.
Annual Report 2023 Nickel Industries
65
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 17 - INVESTMENTS IN EQUITY ACCOUNTED INVESTEES AND ASSOCIATED
INTANGIBLE ASSETS (CONTINUED)
Through the acquisition the Group has also obtained a right to a fixed proportionate share of the MHP offtake of PT
HNC, as per its equity interest, at a discount to the market price which has separately been recognised as an intangible
asset. The consideration transferred under the agreement has been allocated as follows:
Investment in associate – equity method
Other intangible – offtake agreement
Consideration
transferred
$
188,500,000
81,500,000
270,000,000
The following table summarises the information relating to PT HNC of which the Group has a 10% ownership interest as
at 31 December 2023 under the equity method:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets (100%)
Group’s share of net assets (10%)
Carrying amount of interest in associate
Revenue
Loss from continuing operations (100%)
Other comprehensive income (100%)
Total comprehensive loss (100%)
Total comprehensive loss (10%)
Group’s share of total comprehensive loss
PT Huayue Nickel Cobalt
31 December 2023
$
31 December 2022
$
474,005,188
2,397,893,104
(149,478,590)
(863,025,605)
1,859,394,097
185,939,410
185,939,410
346,298,318
(25,605,901)
-
(25,605,901)
(2,560,590)
(2,560,590)
-
-
-
-
-
-
-
-
-
-
-
-
-
Movement in the intangible asset acquired since date of acquisition is as follows:
Carrying amount at beginning of the year
Additions
Amortisation
31 December 2023
$
31 December 2022
$
-
81,500,000
(1,754,785)
79,745,215
-
-
-
-
Amortisation on the intangible asset has been recorded under Cost of Sales in the Consolidated Statement of Profit or
Loss and Other Comprehensive Income.
66
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 18 - CONTROLLED ENTITIES
Acquisition of controlled entities
Oracle Nickel
In December 2021 the Company signed a Definitive Agreement to acquire a 70% interest in the issued share capital of
Oracle Development Private Limited (‘Oracle Development’), a Singaporean holding company which holds 100% of the
shares (directly and indirectly) of PT Oracle Nickel Industry (‘Oracle Nickel’), which is an Indonesian PMA company which
owns and operates the now completed Oracle Nickel RKEF project. The consideration to acquire the 70% interest was
$371 million ($530 million x 70%). At the same time the Company committed to provide 70% of the $220 million funding
required for Oracle Nickel to build a 380MW power plant.
Following the acquisition of an initial 10% interest of the Oracle Development project in February 2022 for $53 million
(inclusive of a $30 million deposit having been paid prior to 31 December 2021) and the acquisition of a further 20%
in May 2022 following the issuance of 108,122,223 shares in the Company at A$1.37 to Decent Resource Limited, an
associate of Shanghai Decent. The Company acquired for $212 million a further 40% interest in Oracle Development on
27 September 2022, this took the Company’s interest in Oracle Development to 70%.
On moving to a 70% interest nominees of Nickel Industries constituted the majority of the Board of Oracle Development
and it was then deemed that Nickel Industries controlled Oracle Development and equity accounting of the investment
in Oracle Development was ceased at 27 September 2022.
The acquisition and control of Oracle Development had the following effect on the Group’s assets and liabilities on
acquisition date, determined on a provisional basis. During the year the Company reviewed the business combination
accounting for the Oracle Nickel project and determined that no material changes occurred or were identified in the
provisional period and no adjustment to the accounting for the business combination was required.
Fair value of net assets of entity
acquired:
Pre-acquisition
carrying
amounts
$
Fair value
adjustments
Advancement
payment*
Recognised
values on
acquisition
$
Cash and cash equivalents
Other current assets
7,959,574
15,163,020
-
-
-
-
7,959,574
15,163,020
Property, plant and equipment*
216,487,755
250,164,043
48,512,245
515,164,044
Trade and other payables
(8,286,638)
-
Goodwill
Deferred income tax liability
Net assets and liabilities
Consideration transferred:
Fair value of equity accounted
investment
Non-controlling interest
Consideration paid
Cash acquired
Net cash outflow
-
-
24,766,240
(24,766,240)
-
-
-
(8,286,638)
24,766,240
(24,766,240)
231,323,712
250,164,043
48,512,245
530,000,000
371,000,000
159,000,000
530,000,000
(371,000,000)^
7,959,574
(363,040,426)
^
*
$106 million was paid in shares as a share based payment through the issuance in May 2022 of 108,122,223 shares in the Company at
A$1.37 per share to a nominee of Shanghai Decent.
Property, plant and equipment consists of construction in progress costs. The total estimated cost of construction of the Oracle RKEF
lines is $265.0 million, of which $48.5 million are advanced payments of construction costs. The Company has no additional acquisition
costs for the Oracle Nickel project, with all RKEF construction costs to be funded by Shanghai Decent.
The values of assets and liabilities recognised on acquisition are their estimated fair values. The fair value of the assets
was determined on acquisition date by reference to a valuation of $530 million, being the underlying valuation when
determining the cost of any additional increase in the Company’s interest in Oracle Development. The $530 million
relates to the valuation of the RKEF plants and ancillary facilities. The cost to construct the Oracle Nickel power plant
was estimated to be $220M and was jointly funded by the Oracle Nickel shareholders in proportion to their indirect
equity interest at the time. i.e. 70% the Company and 30% Shanghai Decent.
Annual Report 2023 Nickel Industries
67
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 18 - CONTROLLED ENTITIES (CONTINUED)
Acquisition of 10% of non-controlling interest
In January 2023 the Company executed an agreement with Shanghai Decent to acquire a further 10% of the issued
and paid-up share capital of Oracle Development Private Limited, being the Singaporean domiciled holding company
that wholly owns PT Oracle Nickel Industry, the Indonesian PMA companies that in turn own 100% of the Oracle Nickel
Project. The acquisition was completed in August 2023, with the Company paying Shanghai Decent and its nominees
US$75M for the additional 10% interest in the Project, with a settlement of $1,471,431 for the 10% of the undistributed
retained earnings attributable to Shanghai Decent remaining in both PT Oracle Nickel Industry to the middle of August
2023. $22M of the $220M contributed by the shareholders of Oracle Development Private Limited for the construction
of the Oracle Nickel power plant was assigned from Shanghai Decent to Nickel Industries.
Particulars in relation to controlled entities:
Company
incorporation and
tax jurisdiction
Ordinary shares –
Group interest
31 December 2023
%
Ordinary shares –
Group interest
31 December 2022
%
Parent entity
Nickel Industries Limited
Australia
Controlled entities
PT Hengjaya Mineralindo
Hengjaya Holdings Private Limited
Hengjaya Nickel Private Limited
PT Hengjaya Nickel Industry
Ranger Investment Private Limited
Ranger Nickel Private Limited
PT Ranger Nickel Industry
Angel Capital Private Limited
Angel Nickel Private Limited
PT Angel Nickel Industry
Oracle Development Private Limited
Oracle Nickel Private Limited
PT Oracle Nickel Industry
Tablasufa Pty Ltd
Tsing Creation International Holding
Limited
Indonesia
Singapore
Singapore
Indonesia
Singapore
Singapore
Indonesia
Singapore
Singapore
Indonesia
Singapore
Singapore
Indonesia
Australia
Hong Kong
80
80
80
80
80
80
80
80
80
80
80
80
80
100
100
80
80
80
80
80
80
80
80
80
80
70
70
70
100
-
68
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 18 - CONTROLLED ENTITIES (CONTINUED)
Non-controlling interests
The following table summarises the information relating to the Group’s subsidiaries that have a material non-controlling
interest, before any intra-group eliminations.
Hengjaya Holdings
Private Limited and
its controlled entities
PT Hengjaya Mineralindo
Ranger Investment
Private Limited and
its controlled entities
December
2023
$
December
2022
$
December
2023
$
December
2022
$
December
2023
$
December
2022
$
Non-controlling
interest percentage
20%
20%
20%
20%
20%
20%
Current assets
136,098,544
146,495,006
101,084,760
44,913,011
121,102,309
136,166,600
Non-current assets
271,983,220
289,447,634
67,274,229
43,514,128
256,929,893
274,143,688
Current liabilities
(15,384,468)
(15,503,705)
(45,587,663)
(22,681,044)
(15,281,375)
(16,458,729)
Non-current liabilities
(25,740,818)
(25,790,776)
(3,104,819)
(5,853,806)
(23,071,514)
(23,107,762)
Net assets
366,956,478
394,648,159
119,666,507
59,892,289
339,679,313
370,743,797
Carrying amount
of non-controlling
interest(2)
Revenue(1)
Profit
Other comprehensive
income
Total comprehensive
income
Profit allocated to non-
controlling interest(2)
Other comprehensive
profit/(loss) allocated
to non-controlling
interest
73,810,988
78,123,854
22,754,837
11,379,795
65,650,864
71,834,809
320,229,496
358,966,074
204,452,613
133,776,804
271,914,811
357,564,103
27,159,065
69,996,848
57,427,273
37,664,956
5,214,687
58,640,772
-
-
(98,781)
7,088
-
-
27,159,065
69,996,848
57,328,492
37,672,044
5,214,687
58,640,772
5,431,813
14,097,223
11,394,799
7,334,521
2,625,787
11,828,036
-
-
(19,756)
1,418
-
-
(1) Includes saprolite nickel ore sales from the Company’s controlled entity PT Hengjaya Mineralindo to the Company’s controlled entities PT
Hengjaya Nickel Industry, PT Oracle Nickel Industry and PT Ranger Nickel Industry.
(2) After intra-group eliminations.
Annual Report 2023 Nickel Industries
69
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 18 - CONTROLLED ENTITIES (CONTINUED)
Angel Capital Private
Limited and its controlled
entities
Oracle Development Limited
and its controlled entities
Total
December
2023
$
December
2022
$
December
2023
$
December
2022
$
December
2023
$
December
2022
$
Non-controlling
interest percentage
20%
20%
20%
30%
Current assets
250,253,744
206,188,169
241,189,948
88,068,271
849,729,305
621,831,057
Non-current assets
645,136,914
685,680,815
710,583,740
740,912,839
1,951,907,996
2,033,699,104
Current liabilities
(86,880,192)
(99,483,745)
(121,074,908)
(143,274,298)
(284,208,606)
(297,401,521)
Non-current liabilities
(22,577,269)
(22,577,269)
(24,766,240)
(24,766,240)
(99,260,660)
(102,095,853)
Net assets
785,933,197
769,807,970
805,932,540
660,940,572
2,418,168,035
2,256,032,787
Carrying amount
of non-controlling
interest(2)
Revenue(1)
Profit
Other comprehensive
income
Total comprehensive
income
Profit allocated to non-
controlling interest(2)
Other comprehensive
profit/(loss) allocated
to non-controlling
interest
159,345,976
155,503,403
160,025,857
199,083,197
481,588,522
515,925,058
728,895,111
505,778,817
539,089,585
-
2,064,581,616
1,356,085,798
120,743,394
83,228,274
47,666,525
1,641,839
258,210,944
251,172,689
-
-
-
-
(98,781)
7,088
120,743,394
83,228,274
47,666,525
1,641,839
258,112,163
251,179,777
24,148,679
16,636,301
11,004,735
492,552
54,605,813
50,388,633
-
-
-
-
(19,756)
1,418
(1) Includes saprolite nickel ore sales from the Company’s controlled entity PT Hengjaya Mineralindo to the Company’s controlled entities PT
Hengjaya Nickel Industry, PT Oracle Nickel Industry and PT Ranger Nickel Industry.
(2) After intra-group eliminations.
70
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
31 December 2023
$
31 December 2022
$
102,748,404
77,982,164
24,766,240
NOTE 18 - CONTROLLED ENTITIES (CONTINUED)
Goodwill
Opening balance
Goodwill arising on acquisition of Oracle Development Private Limited
-
The goodwill balance amounting to $102,748,404 pertains to the Hengjaya Nickel, Ranger Nickel, Angel Nickel and
Oracle Nickel RKEF Projects, which are considered to be individual cash generating units (CGUs). The Directors
consider there to be no impairment on the basis that the recoverable value, determined based on value-in-use, is higher
than the carrying value of the respective CGUs.
The key assumptions used in the underlying cash flows of each CGU (RKEF plant) are set out below. Nickel price and
cash cost estimates used in the cash flows are based on a ‘steady state’ of operations:
102,748,404
102,748,404
CGU
(RKEF Project)
Hengjaya
Nickel
Carrying
amount of
CGU
Carrying
amount of
goodwill
Nickel
production
(tpa)
5-yr
average
NPI price
(p/t)*
5-yr
average
cash costs
($/t)*
Discount
rate -
real post
tax(%)
Remaining
useful life
(years)
$333,624,424
$29,219,349
20,488
$13,045
$11,021
Ranger Nickel
$321,069,815
$26,185,545
Angel Nickel
$736,251,884
$22,577,269
Oracle Nickel
$811,029,068
$24,766,240
19,990
48,600
48,600
$13,045
$11,021
$13,045
$13,045
$9,437
$9,437
10
10
10
10
16
16
19
20
The cash flow projections include specific estimates for the first five years and a constant margin thereafter for the
remaining useful life of the RKEF project. NPI prices have been forecast based on an average of external market analyst
forecast NPI prices. The forecast cash costs incorporate expected savings generated from reduced electricity and coal
costs over the next five years. Forecasts prices and costs are in real terms.
Hengjaya Nickel and Ranger Nickel CGUs
The estimated recoverable amount of the Hengjaya Nickel and Ranger Nickel CGUs were approximately equal to
their carrying value. Therefore, an adverse change in certain material key assumptions would lead to impairment. The
following table shows the impairment which would arise assuming a reasonable possible change in these assumptions:
Reasonable possible change
Impairment
(assuming no change
in any other assumption)
Hengjaya Nickel
$
Ranger Nickel
$
Increase in the discount rate (real) by 1%
$16,830,159
$7,123,241
Reduction in year 1-5 realised NPI prices ($/t) by 10%,
followed by a 5% reduction in years 6-10
Increase in year 1-5 cash costs ($/t) by 10%,
followed by a 5% increase in years 6-10
$118,167,703
$106,394,236
$99,465,114
$87,972,711
Angel Nickel and Oracle Nickel CGUs
The Angel Nickel and Oracle Nickel CGUs benefit from lower operating costs as a result of their inbuilt power plants.
These CGUs have demonstrated comparatively higher margins than Ranger Nickel and Hengjaya Nickel over their
operating life to date, which has been factored into the forecast for these CGUs.
Annual Report 2023 Nickel Industries
71
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 19 - RELATED PARTIES
Key management personnel of the Group during the year ended 31 December 2023 are the following:
Robert Neale
Justin Werner
Chairman (Non-Executive)
Norman Seckold
Deputy Chairman
Managing Director
James Crombie
Director (Non-Executive)
Chris Shepherd
Director and Chief Financial Officer
Weifeng Huang
Director (Non-Executive)
Mark Lochtenberg
Director (Non-Executive)
Dasa Sutantio
Director (Non-Executive)
Muliady Sutio
Director (Non-Executive)
Yuanyuan Xu
Director (Non-Executive)
Binghe Xiang
Haijun Wang
Director (Non-Executive)
Director (Non-Executive)
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to
each member of the Group’s key management personnel for the year ended 31 December 2023. The total remuneration
paid to key management personnel of the Group during the year is as follows:
Key Management Personnel compensation
Short term employee benefits
Other benefits
31 December 2023
$
31 December 2022
$
1,768,935
59,637
1,828,572
1,811,922
29,007
1,840,929
Key Management Personnel transactions
A number of key management persons, or their related parties, hold positions in other entities that result in them
having control or joint control over the financial or operating policies of those entities. A number of these entities
transacted with the Group during the year. The aggregate value of transactions and outstanding balances (excluding the
compensation noted above) relating to key management personnel and entities over which they have control or joint
control were as follows:
Transaction with Director related entity
Director Norman Seckold holds an interest in an entity, MIS Corporate Pty Limited (‘MIS’), which provided full
administrative services, including administrative, accounting, company secretarial and investor relations staff both
within Australia and Indonesia, rental accommodation, services and supplies, to the Group. Fees during 2023 were
charged at an agreed rate of A$38,000 per month. Fees charged by MIS during the year amounted to A$456,000 (31
December 2022: A$459,000). As at 31 December 2023 $nil (31 December 2022: A$38,000) remained outstanding.
Director Xu Yuanyuan holds an interest in an entity, Shanghai Wanlu, which during the year and following shareholder
approval subscribed for 21,186,979 shares in the Company at $1.02 per share. The shares were issued to Shanghai Wanlu
nominee Valence Asia Holding Limited.
Transaction with equity accounted associate
At 15 August 2023 the Company acquired a 10% interest in the HNC HPAL project, operating within the IMIP. From 15
August 2023 to 31 December 2023 the Group sold limonite ore totalling $12,913,064 to the HNC HPAL project, operating
within the IMIP. At 31 December 2023 trade receivables of $8,511,079 remained outstanding and was included in the
creditor’s balance.
As part of the acquisition agreement for the HNC HPAL project on 15 August 2023, the Company acquired a 100%
interest in Tsing Creation. From 15 August 2023 to 31 December 2023 HNC sold mixed hydroxide precipitate (MHP) to
Tsing Creation totalling $24,611,331. At 31 December 2023 there were no trade payables outstanding from Tsing Creation
to HNC.
72
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 19 - RELATED PARTIES (CONTINUED)
Transaction with other related entities
During the year ended 31 December 2023 the Group sold NPI and nickel matte totalling $1,760,925,421 to Shanghai
Decent-related entities and $358,900,532 of raw materials and services and fixed assets were purchased from Shanghai
Decent-related entities. At 31 December 2023 trade receivables of $269,985,290 from Shanghai Decent-related entities
remained outstanding and was included in the receivables balance, and trade payables of $33,535,530 payable to
Shanghai Decent-related entities remained outstanding and was included in the creditor’s balance.
Decent Resource, an associate of Shanghai Decent has provided working capital loans to Oracle Nickel totalling
$7,800,000 ($4,800,000 in 2023 and $3,000,000 in 2022). Interest is charged at a rate of 2.5% per annum. Total interest
incurred by Oracle Nickel on the working capital loan from Decent Resource in 2023 totalled $193,917. At 31 December
2023, a working capital loan amount of $7,800,000 and interest totalling $213,280 remained outstanding and is included
in the borrowings balance.
Additionally Decent Resource had in prior years provided working capital loans to the Angel Nickel project totalling
$16,000,000 ($4,000,000 in 2021 and $12,000,000 in 2022). Interest was charged at a rate of 2.5% per annum. At 31
December 2022 the balance of the working capital loan from Decent Resource to Angel Nickel, including interest was
$10,756,688. During the period Angel Nickel fully repaid the working capital loan, $10,400,000 of principal and $427,615
of interest.
On 18 January 2023, the Company signed an Electric Vehicle Battery Supply Chain Strategic Framework Agreement
with Shanghai Decent and entered into binding agreements with Shanghai Decent to acquire an additional 10% interest
in the Oracle Nickel project and a 10% interest in HNC. Additionally, the Company acquired options to collaborate with
Shanghai Decent on future battery nickel opportunities for $40M (Acquired Options). The Acquired Options comprise:
(i) a $25M option for the construction of a nickel sulphate and electrolytic nickel plant using the HPAL process (to be
known as the Excelsior Nickel Cobalt (ENC) Project); and a $15M option to invest in and construct a low-grade to high-
grade nickel matte converter at Oracle Nickel. Following shareholder approval of a $270.0M Conditional Placement
to Shanghai Decent, in August 2023 the Company completed the acquisition of 10% of HNC and an additional 10% of
Oracle Nickel for consideration of $75M, as well as paid $40M for the Acquired Options. During the year the Company
paid US$126.5M to Shanghai Decent and its associates for an initial 5.5% equity interest in the ENC project and in
December 2023 the Company paid the $189.8M to move to a 13.75% equity interest in the ENC project.
During the year ended 31 December 2023 the Company and Shanghai Decent contributed further funding to the
construction of the Oracle Nickel power plant, in proportion to their respective interests in Oracle Nickel. The Company
contributed $61,600,000 and Shanghai Decent $26,400,000. Additionally, during the period Shanghai Decent and its
associates provided $96,000,000 towards the construction of Oracle Nickel’s RKEF plants and ancillary facilities, in
line with its obligations to fund construction of Oracle Nickel’s RKEF plants. This construction funding is paid to Oracle
Development Pte Ltd (ODPL), the Singaporean entity in which the Company has acquired a 70% direct interest. ODPL
then flows the funds to PT Oracle Nickel Industry, which is constructing the Oracle Nickel project. The Company has no
further obligations towards funding of the Oracle Nickel power plant.
In August 2023 the Company completed the acquisition of a further 10% interest in ODPL from Shanghai Decent.
The Company paid Shanghai Decent and its nominees US$75M for the additional 10% interest in the Project, with a
settlement of $1,471,431 for the 10% of the undistributed retained earnings attributable to Shanghai Decent remaining
in PT Oracle Nickel Industry to the middle of August 2023. $22M of the $220M contributed by the shareholders of ODPL
for the construction of the Oracle Nickel power plant was assigned from Shanghai Decent to Nickel Industries.
During the year ended 31 December 2023 dividend and interest distributions from the Company’s 80% owned subsidiaries
Hengjaya Holdings Private Limited, Ranger Investment Private Limited and Angel Capital Private Limited to Shanghai
Decent’s associates Decent Investment International Private Limited and Decent Resource Limited, totalled $38,851,162.
Shanghai Decent and its associates hold 20% equity interests in the Angel Nickel, Hengjaya Nickel, Oracle Nickel and
Ranger Nickel RKEF project, which reflects the non-controlling interest in the Group amounting to $436,833,684 as at
31 December 2023.
Shanghai Decent and its associates are the Company’s collaboration partner at each of the Hengjaya Nickel, Ranger
Nickel, Angel Nickel and Oracle Nickel projects. Shanghai Decent and its associates also have responsibility for the
design and construction of the ENC project. Under the terms of the acquisition agreement for the ENC project the
Company has committed to acquiring a 55% interest in the ENC project for a total acquisition cost of $1,265M, plus the
$25M option fee paid. At 31 December 2023 the Company has acquired a 13.75% interest for $316.3M.
As a result of the above arrangements, the Group is economically dependent on Shanghai Decent and its associates.
Apart from the details disclosed in this note, no Director or other related party has entered into a material contract with
the Group during the year and there were no material contracts involving Director’s interests subsisting at year end.
Annual Report 2023 Nickel Industries
73
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
31 December 2023
$
31 December 2022
$
NOTE 20 - STATEMENT OF CASH FLOWS
(a) Reconciliation of cash and cash equivalents
Cash and cash equivalents as shown in the Statement of Cash Flows is
reconciled to the related items in the Statement of Financial Position as
follows:
Bank balances
284,053,495
144,242,357
(b) Reconciliation of net loss from ordinary activities after tax to net
cash used in operating activities
Profit from ordinary activities after tax
176,203,376
209,367,610
Adjustments for:
Depreciation and amortisation
Foreign exchange loss/(gain)
Borrowing costs
Net change in fair value of investment in associate
Changes in assets and liabilities
Trade receivables and other assets
Inventory
Provisions
Trade and other payables
Net cash from operating activities
111,656,383
3,319,311
87,578,105
-
66,598,202
8,671,422
29,241,438
404,812
(182,119,720)
(142,482,144)
(7,270,212)
(1,073,548)
41,462,158
229,755,853
(97,848,145)
94,397
(11,004,420)
63,043,172
(c) Reconciliation of movements of liabilities to cash flows arising from financing activities
Liabilities
Equity
Loans and borrowings
$
Share capital
$
Total
$
Opening balance at 1 January 2023
559,288,118
942,442,827
1,501,730,945
Changes from financing activities
Proceeds from issue of shares*
Costs of issue
Proceeds from issue of senior secured notes
Proceeds from borrowings
Costs of issue
Repayment of borrowings
Repayment of interest
Total changes from financing cash flows
Other changes
Finance expenses
Costs of issue expensed – non cash
Total other changes
-
-
1,098,929,850
1,098,929,850
(8,445,651)
(8,445,651)
400,000,000
194,600,000
(11,476,087)
(315,482,000)
(51,008,068)
216,633,845
56,460,092
12,641,373
69,101,465
-
-
-
-
-
400,000,000
194,600,000
(11,476,087)
(315,482,000)
(51,008,068)
1,090,484,199
1,307,118,044
-
-
-
56,460,092
12,641,373
69,101,465
Closing balance at 31 December 2023
845,023,428
2,032,927,026
2,877,950,454
* $270,000,000 was a non-cash investment in an equity accounted investee as disclosed in Note 15.
74
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 21 - FINANCIAL INSTRUMENTS DISCLOSURE
The Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework. Risk management policies are established to identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. These policies are reviewed regularly
to reflect changes in market conditions and the Group’s activities.
The main risks arising from the Group’s financial instruments are credit risk, liquidity risk, currency risk and interest
rate risk. The summaries below present information about the Group’s exposure to each of these risks, their objectives,
policies and processes for measuring and managing risk, the management of capital and financial instruments.
Credit risk
Credit risk arises mainly from the risk of counterparties defaulting on the terms of their agreements. The carrying
amounts of the following assets represent the Group’s maximum exposure to credit risk in relation to financial assets:
Cash and cash equivalents
Term deposits and cash reserve
Trade and other receivables
Loan and interest receivable
Note
31 December 2023
$
31 December 2022
$
20
6
7
8
284,053,495
494,753,107
429,880,644
14,603,421
144,242,357
-
235,617,714
5,853,458
1,223,290,667
385,713,529
Cash and cash equivalents
The Group mitigates credit risk on cash and cash equivalents and term deposits and cash reserve by dealing with
regulated banks in Australia, China, Hong Kong, Indonesia and Singapore.
Trade and other receivables
Credit risk of trade and other receivables is low as it consists predominantly of saprolite and limonite nickel ore and
nickel pig iron and nickel matte sales. Saprolite ore sales are currently all to the Company’s 80% owned subsidiaries PT
Hengjaya Nickel Industry PT Oracle Nickel Industry or PT Ranger Nickel Industry. NPI trade receivables in 2023 were all
from sales to three customers, Shanghai Decent, PT Indonesia Tsingshan Stainless Steel or PT Qing Feng Ferrochrome,
stainless steel producers operating at the IMIP and related parties of the Group, through Shanghai Decent. Low grade
nickel matte trade receivables are from sales to one customer, PT Indonesia Guang Ching Nickel and Stainless Steel
Industry, a stainless steel producer operating at the IMIP and a related party of the Group, through Shanghai Decent.
Mixed hydroxide precipitate trade receivable are from one customer, Golden Harbour based in Singapore. Limonite
ore sales are to Huayue Nickel Cobalt project and the QMB HPAL project, located within the IMIP. HG nickel matte and
MHP sales are to Golden Harbour International Pte. Ltd., located in Singapore. Additional amounts are recoverable from
Australian and Indonesian Taxation Authorities. At 31 December 2023 $287,329,936 was outstanding.
Annual Report 2023 Nickel Industries
75
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 21 - FINANCIAL INSTRUMENTS DISCLOSURE (CONTINUED)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
The following are the contractual maturities of financial liabilities, including estimated interest payments:
Carrying
amount
$
Contractual
cash flows
$
Less than one
year
$
Between one
and five years
$
More than
five years
$
Consolidated
31 December 2023
Trade and other payables
including tax)
218,851,171
218,851,171
218,851,171
-
Borrowings
845,023,428
1,105,986,353
312,292,393
793,693,960
1,063,874,599
1,324,837,524
531,143,564
793,693,960
31 December 2022
Trade and other payables
(including tax)
198,429,800
198,429,800
198,429,800
-
Borrowings
559,288,118
658,090,304
43,625,000
614,465,304
757,717,918
856,520,104
242,054,800
614,465,304
-
-
-
-
-
-
Ultimate responsibility for liquidity management rests with the Board of Directors. The Group manages liquidity risk
by maintaining adequate funding where possible and monitoring of future rolling cash flow forecasts of its operations,
which reflect management’s expectations of expected settlement of financial assets and liabilities.
Currency risk
The functional currency in 2023 was assessed as being United States dollars for all group entities. The Group is
exposed to foreign currency risks due to the fact that the domestic sales of its subsidiaries PT Hengjaya Mineralindo, PT
Hengjaya Nickel Industry, PT Oracle Nickel Industry and PT Ranger Nickel Industry are in Indonesian Rupiah (although
the underlying sale price is denominated in US dollars), liabilities of the Group are denominated in both Indonesian
Rupiah and Australian dollars and the issues of shares during the year were denominated in Australian dollars.
The Group’s gross financial position exposure to foreign currency risk at 31 December is as follows:
31 December 2023
31 December 2022
Foreign currency
USD
Foreign currency
USD
IDR
Cash at bank
IDR974,040,604,882
$63,183,759
IDR646,527,777,428
$41,098,962
Accounts receivable
IDR3,463,863,892,549
$224,692,780
IDR880,464,457,205
$55,970,025
Other current assets
IDR2,896,861,383,941
$187,912,648
IDR2,338,019,497,637
$148,624,976
Provisions and accrual
IDR221,138,742,138
$14,344,755
IDR159,516,969,271
$10,140,294
Taxes payable
IDR303,658,280,925
$19,697,605
IDR244,760,923,332
$15,559,146
Trade and other payables
IDR1,978,211,043,256
$128,321,941
IDR1,272,144,392,570
$80,868,628
AUD
Cash at bank
Receivables
Prepayment
A$83,480,302
$56,850,086
A$107,953
$73,516
-
-
Trade and other payables
A$166,113
$113,123
A$343,150
A$55,844
A$776,960
A$226,846
$233,822
$38,052
$529,421
$154,573
SGD
Cash at bank
SGD$190,358
$144,320
SGD$634,100
$473,102
76
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 21 - FINANCIAL INSTRUMENTS DISCLOSURE (CONTINUED)
The following significant exchange rates applied during the year:
Average rate
Reporting date spot rate
USD
IDR
AUD
SGD
12 months to
31 December 2023
12 months to
31 December 2022
31 December 2023
31 December 2022
15,255
1.507
1.3419
14,906
1.445
1.377
15,416
1.468
1.3191
15,731
1.468
1.340
The following sensitivity analysis is based on the exchange rate risk exposures at balance date. At balance date, if the
exchange rate between the United States dollar and the Indonesian Rupiah, the Australian dollar or the Singaporean
dollar had moved, as illustrated in the table below, with all other variables held constant, the post-tax loss and equity
would have been affected as follows:
Judgement of reasonable possible movements:
Post tax loss
(Higher)/Lower
31 December
2023
$
Total equity
(Higher)/Lower
31 December
2023
$
Post tax loss
(Higher)/Lower
31 December
2022
$
Total equity
(Higher)/Lower
31 December
2022
$
+ 10% higher USD to IDR exchange rate
31,342,487
31,342,487
13,912,589
13,912,589
- 5% lower USD to IDR exchange rate
(15,671,244)
(15,671,244)
(6,956,295)
(6,956,295)
+ 10% higher USD to AUD exchange
rate
5,667,144
5,667,144
- 5% lower USD to AUD exchange rate
(2,833,572)
(2,833,572)
+ 10% higher USD to SGD exchange
rate
- 5% lower USD to SGD exchange rate
14,432
(7,216)
14,432
(7,216)
64,672
(32,336)
47,310
(23,655)
64,672
(32,336)
47,310
(23,655)
Interest rate risk
The Group’s exposure to market interest rate relates to cash assets.
At balance date, the Group had the following mix of financial assets and liabilities exposed to variable interest rate risk:
Financial assets
Cash and cash equivalents
Financial liabilities
Borrowings
31 December 2023
$
31 December 2022
$
20
15
284,053,495
144,242,357
189,800,000
-
Sensitivity analysis
A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) profit for the
period by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis is
performed on the same basis for the comparative period.
31 December 2023
$
30 December 2022
$
Profit for the year
1,192,479
1,410,522
Annual Report 2023 Nickel Industries
77
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 21 - FINANCIAL INSTRUMENTS DISCLOSURE (CONTINUED)
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business.
The Board ensures, where possible, costs are not incurred in excess of available funds and if required will seek to raise
additional funding through issues of shares or debt for the continuation of the Group’s operation.
The Group is not subject to externally imposed capital requirements.
NOTE 22 - PARENT ENTITY DISCLOSURES
As at, and throughout the financial year ended 31 December 2023, the parent entity of the Group was Nickel Industries
Limited.
Result of the parent entity
Net loss
Other comprehensive income
Total comprehensive loss
Financial position of the parent entity at year end
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Share capital
Retained profits*
Total Equity
Parent Entity
31 December 2023
$
Parent Entity
31 December 2022
$
(89,360,427)
(41,775,344)
-
-
(89,360,427)
(41,775,344)
31 December 2023
$
31 December 2022
$
644,463,864
36,077,591
1,859,271,379
1,258,870,240
2,503,735,243
1,294,947,831
259,735,357
579,750,660
839,486,017
1,664,249,226
8,513,944
537,739,379
546,253,323
748,694,508
2,032,927,026
942,442,827
(368,677,800)
(193,748,319)
1,664,249,226
748,694,508
*
During 2023 the Company made dividend payment totaling $85,569,052 (2022: $72,724,697) which is included within retained profits for
the 2023 financial year.
At balance date, the Company has no capital commitments or contingencies (31 December 2022: $nil), other than as
outlined in Note 27.
78
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 23 - SEGMENT INFORMATION
Segment information is presented in respect of the Group’s management and internal reporting structure.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise interest bearing loans, borrowings and expenses, and
corporate assets and expenses. Segment capital expenditure is the total cost incurred during the period to acquire
segment assets that are expected to be used for more than one period in that geographic region.
Operating segments
For the year ended 31 December 2023, the Group had three segments, being nickel ore mining in Indonesia, the RKEF
projects in Indonesia and Singapore and the HPAL projects in Indonesia and Hong Kong.
31 December 2023
External revenues
Reportable segment profit/
(loss) before tax
Nickel ore
mining
$
RKEF
Projects^
$
HPAL
Projects
$
Unallocated
$
Total
$
36,812,648*
1,810,713,299
32,578,847
-
1,880,104,794
76,093,314
209,399,734
3,490,763
(85,692,603)
203,291,208
EBITDA#
87,947,760
337,170,206
5,239,447
(27,009,531)
403,347,882
Interest income
Interest expense
Depreciation and
amortisation
95,514
1,427,669
6,101
11,991,326
-
-
-
69,101,465
13,520,610
69,101,465
4,166,957
105,734,642
1,754,784
-
111,656,383
Withholding tax expense
7,794,907
22,985,254
-
2,039,275
32,819,436
Reportable segment assets
182,458,095
2,628,345,372
614,790,862
645,751,453
4,071,345,782
Reportable segment
liabilities
31 December 2022
External revenues
48,499,648
275,247,098
14,666,929*
1,202,374,891
Reportable segment profit/
(loss) before tax
48,117,774
201,972,377
EBITDA#
53,859,346
298,692,648
Interest income
Interest expense
Depreciation and
amortisation
165,804
320,384
-
-
3,598,279
62,996,831
Withholding tax expense
1,016,895
1,026,056
Reportable segment assets
87,243,576
2,549,195,856
Reportable segment
liabilities
25,522,097
286,199,835
-
-
-
-
-
-
-
-
-
-
840,957,448
1,164,704,194
-
1,217,041,820
(33,044,218)
217,045,933
(13,368,583)
339,183,411
521,325
1,007,513
33,767,809
33,767,809
3,092
66,598,202
16,185,142
18,228,093
36,080,262
2,672,519,694
546,253,323
857,975,255
* Revenue number for sales of limonite ore only. Sales of saprolite nickel ore are internal to the Group and so are eliminated on
consolidation, whilst limonite ore sales are to a party external to the Group.
^ As disclosed in Note 18, the Group has four separate CGUs (RKEF plants) in the RKEF Projects segment. They are considered as an
aggregate portfolio and therefore are included within the one segment here.
# EBITDA is defined as profit/(loss) for the period, plus depreciation and amortisation costs, plus interest income/(expenses),
plus withholding tax expense.
Annual Report 2023 Nickel Industries
79
For the year ended 31 December 2023
Notes to the Consolidated
Financial Statements
NOTE 23 - SEGMENT INFORMATION (CONTINUED)
Reconciliations of reportable segment profit or loss
Profit or loss
Total profit for reportable segments
288,983,811
250,090,151
31 December 2023
$
31 December 2022
$
Unallocated amounts:
Net other corporate expenses
Consolidated profit before tax
Reconciliations of reportable assets and liabilities
Assets
Total assets for reportable segments
Unallocated corporate assets
Consolidated total assets
Liabilities
Total liabilities for reportable segments
Unallocated corporate liabilities
Consolidated total liabilities
Geography of reportable segment assets
(85,692,603)
(33,044,218)
203,291,208
217,045,933
3,425,594,329
2,636,439,432
645,751,453
36,080,262
4,071,345,782
2,672,519,694
(323,746,746)
(311,721,932)
(840,957,448)
(546,253,323)
(1,164,704,194)
(857,975,255)
31 December 2023
Reportable segment assets
31 December 2022
Reportable segment assets
Indonesia
$
Singapore
$
Total
$
3,414,582,900
11,011,429
3,425,594,329
2,630,881,643
5,557,788
2,636,439,431
Revenue
All sales during the year were to customers located in either China, Indonesia or Singapore. All NPI sales by Hengjaya
Nickel, Oracle Nickel and Ranger Nickel were in Indonesia, by Angel Nickel were exported to China and all high grade
nickel matte sales by Hengjaya Nickel were exported to Singapore and all low grade matte sales were in Indonesia. For
the year ended 31 December 2023 the value of total NPI, to a customer based in China was $688.0 million, to customers
based in Indonesia was $802.5 million, the total value of low grade nickel matte sales to two customers based in
Singapore was $198.6 million and the total value of high grade nickel matte sales to a customer based in Singapore was
$121.6 million. Limonite ore revenue totaling $36.8 million was all to customers located in Indonesia.
80
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 24 - REVENUE
Major customers
All sales of nickel pig iron during the year ended 31 December 2023 were either exported sales to Shanghai Decent in
China, or were sales within to PT Indonesia Stainless Steel or PT Qing Feng Ferrochrome, stainless steel producers
operating within the IMIP. All sales of HG nickel matte or mixed hydroxide precipitate were to Golden Harbour, based in
Singapore and all sales of LG nickel matte were to PT Indonesia Stainless Steel or to PT Indonesia Guang Ching Nickel
and Stainless Steel Industry, stainless steel producers operating within the IMIP.
All sales of saprolite nickel ore during the year ended 31 December 2023, were to the Company’s subsidiaries PT
Hengjaya Nickel Industry, PT Oracle Nickel Industry and PT Ranger Nickel Industry, under a series of offtake agreements
to supply between 80,000 to 100,000 wmt per month to each entity. During the year limonite ore was delivered to two
HPAL projects operating within the IMIP, the Huayue Nickel Cobalt project and the QMB HPAL nickel project.
Disaggregation of revenue from contracts with customers
In the following table, revenue from contracts with customers is disaggregated by major production and timing of
revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the Group’s reportable
segments.
Nickel pig iron
Nickel matte
Mixed Hydroxide
Precipitate
31
December
2023
$
31
December
2022
$
31
December
2023
$
31
December
2022
$
31
December
2023
$
31
December
2022
$
Major products
1,490,483,803
1,111,831,675
320,229,496
90,543,216
32,578,847
Timing of revenue
recognition
Products transferred
at a point in time
Revenue from
contracts with
customers
1,490,483,803
1,111,831,675
320,229,496
90,543,216
32,578,847
1,490,483,803
1,111,831,675
320,229,496
90,543,216
32,578,847
-
-
-
Saprolite ore*
Limonite ore
Total
31
December
2023
$
31
December
2022
$
31
December
2023
$
31
December
2022
$
31
December
2023
$
31
December
2022
$
Major products
144,332,258
119,109,876
36,812,648
14,666,929
1,880,104,794
1,217,041,820
Timing of revenue
recognition
Products transferred
at a point in time
Revenue from
contracts with
customers
144,332,258
119,109,876
36,812,648
14,666,929
1,880,104,794
1,217,041,820
144,332,258
119,109,876
36,812,648
14,666,929
1,880,104,794
1,217,041,820
* Sales of saprolite nickel ore are internal to the Group and so are eliminated on consolidation.
The extent to which an entity’s revenue is disaggregated for the purposes of this disclosure depends on the facts and
circumstances of the entity’s contracts with customers.
Annual Report 2023 Nickel Industries
81
For the year ended 31 December 2023 Notes to the Consolidated
Financial Statements
NOTE 25 - AUDITOR REMUNERATION
During the year ended 31 December 2023 KPMG, the Company’s auditor, has performed other services in addition to
their statutory audit duties.
Details of the amounts paid to the auditor of the Group, KPMG, and its related practices for audit and non-audit services
provided during the year and prior period are set out below:
Auditors of the Company
Audit and review of financial reports – KPMG Australia
Audit and review of financial reports – KPMG Indonesia
Other assurance services – KPMG Australia
Other assurance services – KPMG Indonesia
Advisory services – KPMG Australia
31 December 2023
$
31 December 2022
$
388,483
254,567
250,515
13,413
-
906,978
300,249
105,462
47,360
-
10,350
463,421
NOTE 26 – SUBSEQUENT EVENTS
On 30 January 2024, the Company declared a final dividend for 2023 of A$0.025 per share, being a distribution of
A$107.1M ($69.9M). At the same time the Company announced a revised dividend policy and planned on market share
buyback of up to $100M to be conducted over a 12 month period, commencing no earlier than 1 March 2023 and subject
to Pt Danusa Tambang Nusantara receiving approval from the Foreign Investment Review Board (‘FIRB’) approval to
move to a great than 20% equity interest in the Company as a result of any share buyback.
Other than the matters outlined above, there has not arisen in the interval between the end of the financial year and the
date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of
the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of
the Group, in future financial years.
NOTE 27 – COMMITMENTS AND CONTINGENCIES
There are no contingent liabilities existing at 31 December 2023 (31 December 2022: $nil).
Under the terms of Excelsior Nickel Definitive Agreement, the Company has committed to acquire a 55% equity interest
in the Excelsior Nickel Project for $1,265.0M. At 31 December 2023 the Company had acquired a 13.75% interest for
$316.3M.
82
Nickel Industries Annual Report 2023
For the year ended 31 December 2023 Directors’ Declaration
1.
In the opinion of the Directors of Nickel Industries Limited (‘the Company’):
(a)
the consolidated financial statements and notes set out on pages 39 to 82 and the Remuneration report on
pages 32 to 36 in the Directors’ report, are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 31 December 2023 and of its performance
for the year ended on that date; and
(ii)
complying with Australian Accounting Standards, (including the Australian Accounting Interpretations) and
the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in note 2.
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
2.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the
chief executive officer and chief financial officer for the financial year ended 31 December 2023.
Signed at Sydney this 29th day of February 2024 in accordance with a resolution of the Board of Directors:
Norman Seckold
Chairman
Justin Werner
Managing Director
Annual Report 2023 Nickel Industries
83
Independent Auditor’s Report
Independent Auditor’s Report
To the shareholders of Nickel Industries Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Nickel Industries Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
(cid:31)
(cid:31)
giving a true and fair view of the
Group’s financial position as at 31
December 2023 and of its financial
performance for the year ended on
that date; and
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
Basis for opinion
The Financial Report comprises:
(cid:31) Consolidated statement of financial position as at 31
December 2023;
(cid:31) Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of
cash flows for the year then ended;
(cid:31) Notes including material accounting policies; and
(cid:31) Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (including Independence Standards) (the Code) that are relevant to our
audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in
accordance with these requirements.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG
International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used
under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under
Professional Standards Legislation.
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Independent Auditor’s Report
Key Audit Matters
The Key Audit Matters we identified are:
(cid:31) Consolidation of subsidiaries;
(cid:31) Recoverable amount of cash
generating units and impairment of
goodwill; and
(cid:31) Accounting for the investments in
equity accounted associates.
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in
our audit of the Financial Report of the current period.
These matters were addressed in the context of our
audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
Consolidation of Subsidiaries
Refer to Note 18 Controlled Entities to the Financial Report
The key audit matter
How the matter was addressed in our audit
Nickel Industries Limited consolidates its
investments in subsidiaries as outlined in Note
18 to the financial statements. The Group has
operations in Indonesia, a corporate head office
in Australia and other registered entities
overseas. There are also non-controlling
interests held in certain subsidiaries of the
Group.
Consolidation of subsidiaries is a key audit
matter due to the complexity of the manual
consolidation process, significant number of
components in the Group, non-controlling
interests held by the Group, diverse accounting
systems used by the Group and the
consolidation process susceptibility to error, the
impacts of which are potentially significant.
Our procedures included:
(cid:31) We assessed the appropriateness of the
Group’s consolidation accounting policies
against the requirements of the accounting
standards and our understanding of the
business and industry practice;
(cid:31) We obtained an understanding of the
components in the Group, and their ownership
structure, to scope components into our audit,
based on size and level of risk;
(cid:31) We held discussions with management, and
used our knowledge of the Group s operations
to assess the consolidation process;
(cid:31) We tested manual consolidation journals to
underlying documentation given the facts and
circumstances of inter-company transactions
entered into by the Group;
(cid:31) Obtained the Group’s manual consolidation
spreadsheet and tested:
-
-
-
-
the individual financial information for
entities included in the consolidation for
consistency with the reporting we
received from component auditors;
elimination of intercompany balances and
transactions;
sources for each journal and relevance for
inclusion in the consolidation;
and recognition of non-controlling
interests journals and compared against
Annual Report 2023 Nickel Industries
85
Independent Auditor’s Report
the percentage of non-controlling
interests held by the Group.
Recoverable amount of cash generating units and impairment of goodwill
Refer to Note 18 Controlled Entities to the Financial Report
The key audit matter
How the matter was addressed in our audit
A key audit matter for us was the Group’s
testing of the carrying values for its four Cash
Generating Units (CGU) containing indefinite life
intangible assets for impairment, namely
Hengjaya Nickel Project, Ranger Nickel Project,
Angel Nickel Project and Oracle Nickel Project.
This is a key audit matter due to the size of the
CGUs, the complexity of the impairment
models and the nature of the key estimates and
assumptions contained within.
We focused on the significant forward-looking
assumptions the Group applied in its value-in-
use impairment models, including:
(cid:31)
(cid:31)
forecast cash flows – the Group’s
profitability for each CGU has declined
during the financial year as compared
against prior year budgets and/or actual
results. The Group’s margins are derived
from realised Nickel prices and cash costs.
Volatility in forecast Nickel prices are
subject to greater uncertainty in the current
economic environment and the impact of
declining margins increase the possibility of
the carrying value of the CGUs being
impaired, plus the risk of inaccurate
forecasts or a significantly wider range of
possible outcomes for us to consider.
forecast Nickel pricing and cash costs – in
addition to the uncertainties described
above, the Group’s models are sensitive to
reasonable possible changes in these
assumptions, indicating increased risk of
impairment. This drives additional audit
effort specific to their feasibility and
consistency of application to the Group’s
strategy.
(cid:31) discount rates – these are complicated in
nature and vary according to the conditions
Working with our valuation specialists, our
procedures included:
(cid:31) We considered the appropriateness of the
value-in-use method applied by the Group to
perform its impairment test of the carrying
value of the CGUs against the requirements of
the accounting standards.
(cid:31) We assessed the integrity of the value-in-use
models used, including the accuracy of the
underlying calculation formulas.
(cid:31) We compared the forecast cash flows for year
one in the value-in-use models to Board
approved forecasts and sought to understand
any adjustments included in the impairment
models.
(cid:31) We considered the sensitivity of the models by
varying key assumptions, such as forecast
realised Nickel pricing, cash costs and discount
rates, within a reasonably possible range. We
did this to identify those assumptions at higher
risk of bias or inconsistency in application and
to focus our further procedures.
(cid:31) We assessed the accuracy of previous Group
forecasts to inform our evaluation of forecasts
incorporated in the models.
(cid:31) For each of the four CGUs, we:
-
-
challenged the Group’s significant
forecast cash flow assumptions related to
realised Nickel prices and cash costs, in
comparison to observed historical and
expected future pricing and demand in its
products.
assessed these key assumptions for
consistency with the Group’s strategy,
our knowledge of the business, industry,
recent actual cash flows and against
publicly available economic data
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Nickel Industries Annual Report 2023
Independent Auditor’s Report
and environment the specific CGU is
subject to from time to time, and the
model’s approach to incorporating risks into
the cash flows or discount rates. The
Group’s modelling is sensitive to changes in
discount rates.
The Group uses complex models to perform
their testing of the carrying values of the CGUs
for impairment. The models are largely
manually developed, use adjusted historical
performance as well as a range of internal and
external sources as inputs to the assumptions.
Complex modelling, using forward-looking
assumptions tend to be prone to greater risk for
potential bias, error and inconsistent
application. These conditions necessitate
additional scrutiny by us, in particular to address
the objectivity of sources used for assumptions,
and their consistent application.
We involved valuation specialists to supplement
our senior audit team members in assessing
this key audit matter.
representing current and expected future
market conditions.
-
-
assessed cash flow forecasts based on
our experience regarding the feasibility of
these in the industry/economic
environment in which they operate.
applied increased scepticism to forecasts
in the areas where previous forecasts
were not achieved.
(cid:31) We compared forecast realised Nickel prices
to published studies of industry trends and
expectations and considered differences for
the Group’s operations. We used our
knowledge of the Group, its past and current
performance, business and customers, and
industry experience.
(cid:31) We analysed the Group’s discount rates
against publicly available data of a group of
comparable entities adjusted for risk factors
associated with each CGU.
(cid:31) We assessed the disclosures in the financial
report using our understanding obtained from
our testing and against the requirements of the
accounting standards.
Accounting for the investments in equity accounted associates (US$527 million)
Refer to Note 17 Equity Accounted Investees to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group’s acquisition of PT Huayue Nickel
Cobalt (HNC) and Excelsior International
Investment Pte. Ltd. (ENC), represent significant
transactions for the Group during the financial
year.
This was a key audit matter due to the following:
(cid:31) The size of the consideration paid:
-
-
The Group paid consideration of
US$270 million for a 10% equity
interest in HNC and an associated
offtake agreement.
The Group paid consideration of
US$341.3 million for a 13.75% equity
interest in ENC.
Our procedures included:
(cid:31) Reading the acquisition agreements to
understand the key terms and conditions and
the obligations of each entity which is party to
the contract;
(cid:31) Checking the completeness and the nature of
the Group’s obligations required by the
acquisition agreements. We assessed the
existence of triggering conditions of the
obligations to underlying events of the Group
and our understanding of the business. We
compared these to the criteria for recording
liabilities and recognising assets to the
requirements of the accounting standards;
(cid:31) Working with our technical accounting
(cid:31) The significant judgement required by the
specialists, assessing the appropriateness of
Annual Report 2023 Nickel Industries
87
Independent Auditor’s Report
Group in assessing the substance of the
acquisition transactions, and to determine
the Group’s significant influence over the
acquired entities. We focused on challenging
the Group’s application of the accounting
standard requirements to the Group’s
ownership in the entity which necessitated
the involvement of our technical accounting
specialists.
(cid:31) Complexity of the acquisitions involve
multiple parties, and the terms and
conditions of the acquisition agreements and
their pervasive impacts on the financial
report.
These conditions required significant audit effort
and greater involvement by senior team
members and KPMG specialists.
the Group’s accounting treatment of its interest
in each entity against the criteria in the
accounting standards. This included assessing
the evidence of the Group’s significant
influence over the entities from the features of
the acquisition agreements;
(cid:31) Checking the consideration paid for the
acquisitions against the underlying documents
of the Group and the amounts recorded in the
general ledger;
(cid:31) Obtaining the accounting records of the equity
accounted associates and assessing
consistency of accounting policies with those of
the Group, and recalculating the Group’s share
of the associates’ profit or loss for the period;
(cid:31) Evaluating the Group’s disclosures in the
financial report against the requirements of the
accounting standards and our understanding of
the terms and conditions of the acquisition
agreements.
Other Information
Other Information is financial and non-financial information in Nickel Industries Limited’s annual report
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other
Information. In doing so, we consider whether the Other Information is materially inconsistent with
the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
(cid:31) preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
(cid:31)
(cid:31)
implementing necessary internal control to enable the preparation of a Financial Report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error
assessing the Group and Company’s ability to continue as a going concern and whether the
use of the going concern basis of accounting is appropriate. This includes disclosing, as
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Nickel Industries Annual Report 2023
Independent Auditor’s Report
applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Group and Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
(cid:31)
(cid:31)
to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report
of Nickel Industries Limited for the year
ended 31 December 2023, complies with
Section 300A of the Corporations Act
2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration
Report in accordance with Section 300A of the
Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in
pages 32 to 36 of the Directors’ report for the year
ended 31 December 2023.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG
Adam Twemlow
Partner
Brisbane
29th February 2024
Annual Report 2023 Nickel Industries
89
Additional ASX Information
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is
as follows. The information is current as at 31 January 2024.
DISTRIBUTION OF EQUITY SECURITIES
ORDINARY SHARES
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
Above 100,001
Number of Holders
3,148
5,122
2,422
4,929
719
16,340
Number of
Shares
2,077,957
14,458,579
19,211,029
158,956,496
4,091,105,819
4,285,809,880
The number of shareholders holding less than a marketable parcel is 1,459.
TWENTY LARGEST SHAREHOLDERS
The names of the twenty largest holders of quoted shares are:
Nº
SHAREHOLDER
Number of Shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
PT Danusa Tambang Nusantara
Decent Investment International Private Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
PT Harum Energy TBK
Shanghai Decent Investment (Group) Co., Ltd
BNP Paribas Noms Pty Ltd
Decent Resource Limited
Shanghai Wanlu Investment Co Ltd
HSBC Custody Nominees (Australia) Limited – A/C 2
Altinova Nominees Pty Ltd
Permgold Pty Ltd
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