EU scrutiny of Anglo-MMG nickel deal tests China stance

China-backed MMG (HKG: 1208) is urging European regulators to approve its $500-million (C$690 million) purchase of Anglo American’s (LSE: AAL) Brazilian nickel business in a case that could test how far Brussels will go to limit Chinese control over strategic resource supply chains.

The European Commission (EC) is investigating whether the acquisition could allow MMG to divert Brazilian ferronickel away from Europe, potentially raising costs for stainless steel producers. EU regulators are expected to issue a formal warning over the transaction next week.

“Ultimately, we’re confident that DG COMP will put geopolitical considerations aside and judge this on the data,” Troy Hey, MMG executive general manager of corporate relations, told The Financial Times, referring to the commission’s Directorate-General for Competition.

The case reaches beyond a conventional competition review as Europe tries to reduce its reliance on China for metals and minerals following Beijing’s export restrictions on a range of materials. Ferronickel is not classified as a critical mineral, but European steelmakers are concerned that increasing Chinese ownership of overseas production could leave the industry more exposed to supply disruptions or economic pressure.

Supply concerns

MMG agreed in February 2025 to acquire Anglo’s Brazilian nickel business, including two ferronickel operations and two greenfield projects. The Hong Kong-listed miner is controlled by state-owned China Minmetals.

The commission said in November that the transaction could give MMG the ability and incentive to divert ferronickel supplies away from Europe, potentially weakening the competitiveness of the region’s stainless steel producers.

MMG disputes that assessment. “The independent data commissioned by DG COMP is very clear and consistent,” Hey told the FT. “There is no ability to foreclose the market, nor is there any incentive to do so.”

Anglo has also argued the transaction should be cleared without conditions, pointing to expanding ferronickel production from other suppliers and European customers’ ability to switch sources. It said EU restrictions on Chinese steel imports also mean Chinese stainless steel cannot simply be redirected into Europe and should not be considered a competitive threat.

Brazil and Indonesia are notable ferronickel producers, while China does not produce the material, according to price reporting agency Fastmarkets. China is instead a major producer and consumer of nickel pig iron, another feedstock used in stainless steel manufacturing, while European producers also rely heavily on recycled material.

Critics argue those headline supply figures understate the difficulty of replacing Brazilian ferronickel. Nickel content, product quality, reliability and carbon intensity vary between suppliers, potentially making alternatives more costly or unsuitable for some European manufacturers. Brazil’s heavy reliance on hydroelectricity also gives its production a relatively low carbon footprint.

Wider stakes

The transaction is also attracting scrutiny outside Europe. Brazil’s competition authority launched an investigation following a complaint by CoreX Holding, an industrial group and regional competitor.

Opponents say regulators should consider the acquisition against the broader competition among major economies for control of raw materials and escalating trade tensions between the United States and China.

That argument presents Brussels with a difficult choice. Competition authorities must assess the transaction on its market effects while European policymakers are simultaneously trying to reduce strategic dependencies and strengthen domestic industrial supply chains.

Blocking or imposing conditions on the acquisition could signal that ownership and geopolitical supply risks are becoming more important considerations in European resource deals. Clearing it without conditions would reinforce MMG and Anglo’s argument that concerns about Chinese control do not outweigh the available evidence on ferronickel competition.