Axiom Mining Limited (ASX: AVQ) has seen its share price more than double in the past month, although the share price has pulled back in recent days from its peak.

From 15 cents on June 14 to 30.5 cents today, Axiom Mining shares have soared on expectations that the Solomon Islands authorities will shortly issue the company with the relevant permits and licencing to continue developing a huge nickel deposit.

Axiom Mining share price chart

Source: Yahoo Finance

The miner was stripped of its licence in March 2016 by the Solomon Islands, forcing it to reapply. Axiom owns 80% of Axiom KB, with landowners holding the remaining 20%.

Nickel demand is expected to be close to flat for the rest of this year and into 2017 as a result of weak economic growth in China. The metal is closely linked to steel demand, particularly in China, which accounts for 51% of all world consumption.

However, nickel output is expected to shrink this year. The world’s largest producer, the Philippines, is expected to see a decline in mined production of 16%, more than offsetting increases from Canada and New Caledonia. In the first 4 months of this year, Philippines production fell 38%.

The Australian Department of Industry, Innovation and Science said in its report last week that there was also growing uncertainty about nickel ore production in the Philippines. The country’s new government is expected to implement new measures to ensure stricter environmental compliance by the mining industry.

President-elect Rodrigo Duterte is reported to have told a forum of businessmen that he will review all mining claims and won’t hesitate to scrap those “spoiling the land”.

Should the Philippines deliver on its tough new reforms, nickel prices could soar – benefitting small nickel miners like Axiom – as well as the larger ASX nickel plays Western Areas Ltd (ASX: WSA), Independence Group NL (ASX: IGO) and Panoramic Resources Ltd (ASX: PAN).

Axiom benefits by being able to produce direct shipping ore – which requires minimal capital when compared to other Australian nickel projects. Independence Group’s Nova project (acquired when the company took over Sirius Resources in May 2015) has a much higher start up capital cost ($443 million) as well as ongoing sustaining capital ($148 million).

Foolish takeaway

The nickel industry and miners like Axiom and Panoramic may well benefit if the Philippines goes ahead with its mining reforms. Add in the potential for Axiom to receive approval for its licence anytime soon and there’s no wonder the share price has shot up in the past few weeks.

However, Axiom is still a highly speculative miner, and Foolish investors might want to keep clear.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.