China-backed MMG has urged EU regulators to approve its $500mn deal to buy the Brazilian nickel assets of Anglo American despite concerns that the deal would give Beijing greater control over a key component for Europe’s struggling steel industry. EU regulators are set to issue a formal warning over the deal next week, people familiar with the decision said. The commission declined to comment.

EU officials worry that a sale of the Brazilian assets to MMG, announced last year, would reduce supplies of ferronickel to Europe’s stainless steel producers, leading to higher production costs and affecting their ability to compete. Christophe Moulin, senior nickel analyst at Benchmark Mineral Intelligence, said the deal was “highly political for Europe and its stainless steel producers, who rely on importing ferronickel to feed their meltshops”. MMG insisted those risks were overstated. “The independent data commissioned by DG COMP is very clear and consistent.

There is no ability to foreclose the market, nor is there any incentive to do so,” said Troy Hey, MMG executive general manager of corporate relations. Eurofer said the outcome of the commission probe “must safeguard Europe’s ability to source responsibly and continue producing high-quality stainless steel in Europe, while avoiding a situation in which any single country is able to dominate the global market”. Core X Holding, a conglomerate founded by Turkish investor Robert Yildirim, said European steelmakers would struggle to replace Anglo’s Brazilian production if supplies were redirected.

Yildirim, who was also in the running to buy Anglo’s Brazilian mines, said he was still interested in a sale.