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EU’s Nickel Strategy Hits a Wall in Brazil as ESG and Viability Questions Mount
Europe’s drive to secure nickel supply for industry and the energy transition is colliding with practical constraints—ranging from project viability to environmental safeguards. A newly designated EU “strategic project” centers on the São Miguel Paulista (SMP) nickel refinery in Brazil, yet the choice of asset and operator is drawing scrutiny over whether it can deliver dependable benefits while meeting ESG expectations.
The EU drafted its policy framework for critical materials in 2022, aiming to reduce dependence on China, with strategic projects inside and outside Europe forming a core part of that approach. The first list of such projects appeared in 2025; while some high-profile initiatives attracted attention, less visible cases like SMP are now being used to question how selection criteria are applied.
A “Strategic Project” With Delayed Restart Plans
SMP has been inactive since 2016. It was previously operated by Votorantim Metais before control shifted to Australian group Jervois Global. According to the account, Jervois Global is currently under bankruptcy proceedings and judicial recovery, with production expected to resume only in 2027—and at levels below past capacity.
The concern extends beyond timing. The refinery’s selection is described as questionable given Europe’s stated goal of reducing reliance on China and Indonesia, which dominate nickel processing globally. Unlike rare earths—where processing can be more concentrated—the source notes that nickel processing is not highly concentrated, making Europe’s dependence on a troubled restart project particularly sensitive.
Operator Hurdles: Stainless Steel First, Battery Later
The challenges facing Jervois Global are laid out through planned production targets and sourcing assumptions. The planned output would initially be directed toward stainless steel, not electric-vehicle battery feedstock. Estimated production is cited as 10,000 tons of metallic nickel by 2028, which would be below previous capacity.
The report also suggests raw materials will likely be imported from Indonesia, limiting Europe’s supply autonomy even if the refinery restarts. While local employment effects are mentioned—450 direct jobs plus an estimated 1,300–1,500 indirect roles—the immediate strategic value for Europe’s EV battery market is characterized as limited at first.
São Miguel Paulista’s Industrial Legacy Raises ESG Concerns
Beyond commercial feasibility, the SMP location itself brings additional risk factors into focus. The district has a long history of industrial pollution dating back to operations by Nitro-Química Brasileira. The concerns include waste discharge into the Tietê River associated with fish kills and chemical contamination; worker accidents, explosions, and union suppression during Brazil’s military dictatorship; and ongoing issues involving air, water, and soil contamination.
This record feeds into what the source describes as serious ESG questions about why the EU designated the refinery as strategic—particularly when host-community impacts are part of how investors increasingly evaluate supply-chain resilience.
Brazil’s Licensing Changes Add Another Layer of Uncertainty
The debate also turns to regulatory conditions in Brazil. Recent changes to Brazil’s General Environmental Licensing Law allow for self-licensing even for large mining projects. Critics argue this weakens roughly four decades of environmental protection and could increase risks to human rights, public health, and ecosystems.
The source further states that reports indicate mining companies often influence legislation and licensing processes—an assertion presented as increasing both environmental and social risk across projects subject to these frameworks.
What SMP Signals About EU Strategic Project Selection
Taken together, the SMP case is used to illustrate multiple perceived shortcomings: weak selection criteria for EU strategic projects; limited near-term benefit for Europe’s battery and energy transition ambitions; and significant ESG and human rights risks in host countries.
The conclusion calls for Europe to apply its ESG standards in practice rather than treating them as formal requirements on paper. It also emphasizes strengthening recycling and resource-efficiency measures so that external sourcing does not undermine human rights or environmental safety objectives—especially when partner assets face viability problems or regulatory uncertainty.
Europe’s push for nickel security
Critical Raw Materials Act
ESG questions
reliance on China
