EU warns MMG-Anglo nickel deal may hurt competition

The European Commission warned that MMG’s proposed purchase of Anglo American Plc’s nickel business may restrict competition and raise costs for stainless steel producers in Europe.

Anglo American agreed last year to sell its nickel operations in Brazil to China’s MMG for as much as $500 million, prompting EU regulators to investigate due to fears that the buyout could jeopardize supplies of ferronickel, a raw material for stainless steel.

In a preliminary opinion on Wednesday, the Commission said it’s particularly concerned that MMG would divert low-carbon ferronickel supply away from European markets, which may result in higher prices for stainless steel.

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“Such a diversion of supply, combined with limited alternative supply sources, could adversely affect the price of low-carbon ferronickel” with negative implications for European stainless steel producers and costs, the Commission said.

MMG can now respond to the EU and request an oral hearing. The Commission has until Nov. 30 to make a final decision.

“Blocking this acquisition would create a lose-lose outcome for all stakeholders,” said Troy Hey, MMG’s executive general manager for corporate relations. “Rather than strengthening competition, it threatens to limit investment and jobs in Brazil and remove supply from the market.” He said the company will make a full response to the EU’s objections.

MMG’s acquisition of Anglo’s business would enhance China’s grip on global supplies of nickel, which includes major investments in Indonesia. The Hong Kong-listed firm operates projects from Australia to Africa and South America and is controlled by state-owned mining-to-trading giant China Minmetals Corp.

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