EU Launches In-Depth Probe into MMG’s $500 Million Nickel Deal

Chinese-owned mining firm MMG Ltd. faces a thorough investigation from the European Union regarding its $500 million acquisition of Anglo American Plc’s nickel operations in Brazil. This probe arises from concerns that the deal could adversely affect the EU’s stainless-steel industry by potentially limiting access to ferro-nickel, an essential alloying material.

During a press briefing, Teresa Ribera, the EU’s competition chief, emphasized the need to scrutinize whether the transaction “could jeopardize continued and reliable access in Europe” to this critical resource. As a result, both companies are tasked with proposing solutions to alleviate regulatory concerns. If they fail to do so, they risk the deal being blocked, with a final decision expected by March 20, 2024.

In a joint statement, MMG and Anglo American expressed confidence that their agreement will not pose competition issues. They pledged to collaborate with the EU regulators to resolve any outstanding questions. The acquisition not only strengthens MMG’s position in the nickel market but also highlights the increasing influence of Chinese firms in global nickel supply chains. While MMG is publicly traded in Hong Kong, its majority ownership lies with the state-owned China Minmetals Corp..

Criticism of the deal has extended beyond Europe. The American Iron and Steel Institute has urged the White House to intervene, arguing that the acquisition could enhance China’s control over global nickel reserves. Earlier attempts to sidestep a full-scale investigation were unsuccessful, as regulators deemed the proposed commitments for Anglo to procure ferro-nickel from MMG’s Brazilian mines insufficient.

The current investigation falls under the EU’s Phase 2 review process, which typically adds approximately 90 working days to deal assessments. This phase may extend further if regulators require additional information. The EU’s antitrust authority often seeks robust remedies to address competition concerns but can also grant unconditional approval if initial worries are proven unfounded.

As the investigation unfolds, the implications for both companies and the broader market will be closely monitored. The outcome could significantly influence the dynamics of nickel supply and pricing in Europe and beyond, impacting multiple industries reliant on this vital resource.