Hong Kong-listed MMG (HKEX: 1208) will revise proposed remedies to EU antitrust regulators in a last-ditch attempt to secure approval for its $500 million bid for Anglo American’s (LON: AAL) Brazilian nickel business, it said on Wednesday.
The European Commission, however, is leaning towards a veto of the deal after negative feedback from third parties and with regulators unconvinced by MMG’s remedies, two people close to the matter said.
“The feedback has been critical but constructive and we are confident our modified proposal will resolve outstanding concerns for both customers and European Commission regulators,” MMG said in a statement responding to Reuters’ questions.
The Commission, which will decide on the deal by December 21, declined to comment.
The EU watchdog’s main concern was that MMG could redirect ferronickel supplies away from Europe to China, potentially harming the bloc’s stainless steel producers amid broader EU concerns about dependence on China for critical minerals.
However, industry analysts say China is an unlikely alternative market for Brazilian ferronickel because Chinese stainless steel producers are largely supplied by cheaper Indonesian nickel products.
Adjustments to MMG’s proposed remedies include increasing the volumes of ferronickel supplied to Europe to 16,000 metric tons a year from 11,500 tons and providing greater certainty over contracts and pricing flexibility, said a person close to the talks.
“How can it be that MMG has offered a remedy with conditions and supply as good or better than Anglo’s agreement and the EC say, ‘that’s not good enough’?” the person said.
“What do we do in that situation? We turn over every stone we possibly can on how to make this work. But there’s limited stones left.”
Anglo American executives warned regulators last month that it is likely to shut down its Brazilian nickel operation if EU antitrust regulators block the sale.
MMG said there were no structural remedies, such as asset sales, available in what was effectively a single-asset purchase and neither the Commission nor customers had proposed any viable solutions.
China’s state-owned Minmetals holds 67% of MMG, with the rest owned by investors including BlackRock and Vanguard.
(Reporting by Melanie Burton and Foo Yun CheeEditing by Louise Heavens and David Goodman)
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