MMG hit with EU antitrust warning over nickel deal with Anglo American

By Foo Yun Chee

BRUSSELS, Sept 16 (Reuters) - MMG was hit with an EU antitrust warning on Wednesday over its plan to buy Anglo American's Brazilian nickel business, as regulators said the Hong Kong-listed mining and metals company may divert the supply away from Europe, hurting European stainless steel producers.

The European Commission, which acts as the European Union competition enforcer, set out its concerns in a statement of objections, confirming a Reuters story last week.

The move underscores mounting European Union concerns about the bloc's reliance on China for critical minerals vital to defence, technology and renewable energy and Beijing's use of export control measures on critical mineral supplies.

The EU warning ramped up pressure on MMG to offer concessions in return for clearance of the deal. Remedies it offered during the Commission's preliminary review were rejected for not sufficiently addressing concerns. 

"MMG could divert the target's low-carbon ferronickel supply towards in particular its affiliated stainless steel producers (controlled by SASAC), and away from European producers," the Commission said in a statement.

"Such a diversion of supply, combined with limited alternative supply sources, could adversely affect the price of low-carbon ferronickel in the EEA and have a negative impact on resilience of European stainless steel producers," it said.

The Chinese State-owned Assets Supervision and Administration Commission (SASAC) controls China Minmetals Corporation, which in turn controls MMG. 

Anglo American said it was disappointed with the EU warning, adding that the deal would maintain the number of suppliers in the market.

"The EC's assessment seems to have ignored the commercial realities of the market and the significant expansion of ferronickel (FeNi) supply that has actually taken place over the last 12 months," a spokesperson said.

MMG did not immediately respond to a request for comment. Its executive general manager of corporate relations told Reuters earlier on Wednesday that the company is willing to guarantee long-term ferronickel supplies to European customers to ease EU concerns.

(Reporting by Foo Yun CheeEditing by Rod Nickel)