European Union regulators have formally raised competition concerns over MMG Ltd.’s proposed acquisition of Anglo American Plc’s Brazilian nickel operations, intensifying scrutiny of Chinese-linked ownership of mineral supplies considered important to European industry.
The European Commission issued a statement of objections to Hong Kong-listed MMG, warning that the transaction could leave European stainless-steel manufacturers with reduced access to low-carbon ferronickel, according to Reuters. The Sept. 16 action confirmed concerns Reuters had reported earlier this month.
Regulators are examining whether MMG could redirect production from Anglo American’s Brazilian operations away from European buyers and toward affiliated stainless-steel producers connected to Chinese state ownership, Reuters reported. Such a shift could reduce supply alternatives in Europe and put upward pressure on ferronickel prices, according to the European Commission’s concerns cited by Reuters.
The case adds a strategic dimension to what would otherwise be a conventional merger review. European policymakers have become increasingly focused on the region’s exposure to China in critical-material supply chains, particularly as minerals play a growing role in defense, advanced technology and renewable-energy industries, according to Reuters.
MMG is controlled by China Minmetals Corp., which is ultimately under China’s State-owned Assets Supervision and Administration Commission, or SASAC, according to Reuters. EU regulators are concerned that those ownership links could create incentives to favor Chinese state-connected steelmakers over European customers.
Related: MMG Faces EU Antitrust Warning Over Anglo American Nickel Deal
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The proposed transaction covers Anglo American’s Brazilian nickel business. European Commission records show the acquisition involves MMG taking sole control of Anglo Nickel Brazil, which mines, processes and sells nickel. Reuters has reported that the package includes the Barro Alto and Codemin ferronickel operations as well as two development projects, with a potential transaction value of as much as $500 million.
The formal objections increase pressure on MMG to offer stronger commitments if it wants to secure regulatory approval. Remedies proposed during an earlier stage of the Commission’s review were deemed insufficient to resolve the competition concerns, according to Reuters.
MMG has signaled that it is prepared to make commitments designed to preserve European access to the material. Troy Hey, the company’s executive general manager of corporate relations, told Reuters that MMG was willing to provide long-term ferronickel supply assurances to European customers as part of its effort to address the Commission’s concerns.
Anglo American challenged the regulator’s assessment. The miner said it was disappointed by the objections and argued that the acquisition would not reduce the number of suppliers available to the market, according to Reuters. The company also said the Commission’s analysis did not adequately reflect an expansion in ferronickel supply over the past year.
MMG did not immediately respond to Reuters’ request for comment following the Commission’s announcement.
The dispute puts the transaction at the intersection of competition policy and Europe’s broader push to reduce vulnerabilities in strategic supply chains. While the assets being acquired are in Brazil, regulators’ objections focus on how control of their output could change once the business is owned by a company ultimately linked to the Chinese state.
MMG now has an opportunity to respond to the Commission’s objections and seek to address them before regulators reach a final decision. The European Commission’s review is being conducted under EU merger rules, with the case registered as M.11944, according to official EU records.
Source: Reuters
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