The EU is betting on a shuttered refinery in Brazil to secure nickel – run by a struggling company with a troubling environmental record. A closer look shows: Strategic projects in raw materials policy needs more credible selection criteria.
The race for minerals is ongoing. Not only is Donald Trump looking for new ways to secure its access to raw materials. In 2022, the EU drafted its Critical Raw Materials Act, with the main aim of becoming less dependent on China, and one of its main instruments was strategic projects within and outside the EU. The first list of strategic projects was presented in the summer of 2025. The next selection round is ongoing. Some of the selected projects have been highly contested and debated in Europe, such as the strategic lithium project Jadar in Serbia.
There are others about which there is much less known. One of these less-discussed projects is the nickel refinery in Brazil. Yet it gives very interesting insights into the instrument's strategic project. Looking more closely into the example, serious questions arise regarding the selection criteria of the EU for its strategic projects: their viability, their actual use for the EU, and their impact on the ground. We can even ask the question to what extent this instrument is actually helping Europe to meet its policy goal of better access to raw materials.
The Situation in Brazil Doesn't Look Very Promising
When listing the critical mineral projects considered strategic within Europe and outside the bloc, the European Union, selected, in Brazil, a single project of a nickel refinery deactivated since 2016, with low production, controlled by an Australian group – Jervois Global – which is undergoing bankruptcy and judicial recovery and, if all goes well, should only resume refining nickel in 2027. It is a curious choice to tackle the concentration of the nickel market in China, responsible for about 40 percent of the world's nickel processing, and Indonesia, which extracts more than 30 percent of the global nickel market but processes about 15 percent.
Although in the hands of a few countries, which also includes a considerable share of Russia in production (more than 10 percent) and Japan in processing (about 8 percent), nickel is not among the most concentrated critical mineral markets on the planet, especially in processing, which reaches about 90 percent in the case of rare earths and manganese, both in China, which dominates most of the chain of these minerals. Located in an industrial zone of São Paulo, the largest city in Brazil and one of the largest in the world, near the international airport of Guarulhos, the São Miguel Paulista refinery operated until 2016 and was deactivated by the then owners at the time, the Votorantim Metais group, due to the low price of nickel in the international market.
The European Union selected in Brazil a single project of a nickel refinery deactivated since 2016, with low production, controlled by an Australian group.
Fluctuations in mineral commodities often cause significant shocks in the market and put the expansion plans of mines, refineries, and industrial plants, new or existing, at risk. At the same time, one could say that it is threatening the pace of the energy transition, which demands enormous quantities of minerals for the coming decades, as well as aggravating the scenario of socio-environmental impacts. In addition to the nickel refinery in São Miguel Paulista, the Australian Jervois owns a cobalt mine in the United States, in Idaho, and a cobalt processing plant in Finland, whose products are applied in various batteries, in the metallurgical, pigment, and chemical compound industries.
The company, however, is undergoing judicial liquidation, has just been delisted from the stock exchanges it was listed on, and has passed into the hands of the United States investment fund Millstreet Capital, which has committed to investing about USD 145 million in the company, with USD 70 million for the renovation and restructuring of the nickel refinery in São Miguel Paulista, São Paulo.
The new CEO of Jervois Global, Conor Spollen, who took over in August, will take on a company in complete restructuring. In Brazil, the executive responsible is Carlos Braga, who has worked for several other mining companies, such as Votorantim, Meridian Mining, Mineração Morro Verde, which produces phosphate and supplies to the Brazilian agribusiness, and the consulting firm McKinsey.
Expectation and Reality in Meeting Europe’s Industry’s Nickel Demand Differ
Speaking to the newspaper Folha de S. Paulo, Braga admitted two essential things. First, that the initial expected production of SMP will be well below full capacity and that the initial focus is not the electric car battery market. Jervois expects to produce 10,000 tons of metallic nickel by 2028, which is 15,000 tons less than the production capacity of Votorantim Metais when the refinery's production was suspended in 2016. The plant will also be able to refine 2,000 tons of cobalt.
Metallic nickel, however, is usually used in the manufacture of special stainless steel or in the production of electric car batteries. However, Jervois' initial intention is to work with the stainless steel market, as it requires a smaller investment. Only at a later stage might Jervois "change its route" to meet European interests in nickel that can be used as raw material for batteries.
Jervois stated that it will sell a significant part of the production locally in Brazil and that international contracts will be signed later, closer to the start of production.
"If we were to produce nickel sulfate (raw material for batteries), we wouldn't reach metallic nickel; we would go through an earlier stage. But the price difference between sulfate and metallic nickel varies a lot, so we think it's not the right time to focus our investment on sulfate. We'll do what we already have here, which requires less investment," Braga told the newspaper. In response to a request for comment for this article, Jervois Global's advisory confirmed that the company will, in the initial restart phase, produce "metallic nickel and metallic cobalt in the form of cathodes, which are traditionally used in the stainless steel industry."
This confirmation suggests that choosing the project as strategic makes little sense, if the bloc's intention is, as often stated, to use it, inputs for the global electric car battery industry. Additionally, Jervois stated that it will sell a significant part of the production locally in Brazil and that international contracts will be signed later, closer to the start of production.
The company also did not guarantee that operations would begin in 2027, still depending on the allocation of available resources and responded only generically about its contacts with different levels of government in Brazil, stating only that it had obtained the required licenses and permits. According to Jervois, "by reusing the original site and infrastructure, the SMP refinery reactivation project has a relatively small environmental impact compared to a greenfield project and will extend the life of a long-standing industrial complex, avoiding its gradual abandonment."
Dependence on China and Indonesia Is a Chronic Problem
The technical difficulties in breaking the dominance of the China-Indonesia duo in the global nickel market, one of the primary motivations for the European Union to define strategic projects, involve technical challenges that are not easy to solve.
Jervois will need to import nickel hydroxide to produce metallic nickel, its final product. The company's advisory confirmed that "the raw material, in the form of mixed hydroxide precipitate (also known as MHP), will likely come from Indonesia. Jervois will seek to obtain locally sourced material if available in the future." Regarding the company's future customers, Jervois limited itself to saying that there are "robust markets in the United States, Europe, and Asia." Currently, the primary nickel mines operated in Brazil are controlled by Vale, Anglo American, and Atlantic Nickel. Still, Vale and Anglo focus on the production of ferronickel, a lower-value-added product that also primarily targets the stainless steel market. Atlantic does not share a route that interests Jervois, leading the company to seek the product abroad.
Braga told the newspaper Folha de S. Paulo that a trading company from Turkey is one of the options. Still, Indonesia is also an option, making it challenging to escape Chinese dominance in part of the chain. According to Braga, even so, "it would be better" for Europeans to buy from an "independent" refinery, in this case, SMP, which buys part of its ore from Indonesia, than from a refinery dominated from end to end of the chain by Indonesians and Chinese. This difference between the primary product produced by SMP, the difficulty of importing raw material, and Jervois' reduced immediate investment capacity will lead the refinery not only to make less than half of what it produced in the past but also far below what large refineries in the world produce, from 40,000 to 100,000 tons of metallic nickel, in the case of some Chinese refineries.
Still, Indonesia is also an option, making it challenging to escape Chinese dominance in part of the chain.
The company's narrative, however, is that "by adding value through processing and refining, the SMP refinery will help consolidate Brazil's role in the geopolitics of critical raw materials. Instead of acting only as an exporter of unprocessed commodities, the country strengthens its ability to supply high-quality refined products, essential for advanced manufacturing technologies and clean energy." This context becomes even more complex because Anglo American's nickel production, one of the largest mining companies in the world, in Brazil, divided into several states – Goiás, Pará, and Mato Grosso – has just been sold to a Chinese mining company, MMG, a subsidiary of the Chinese state-owned China Minmetals, for USD 500 million. This generated official questions from the Turkish group Yldirim – one of SMP's potential suppliers – which stated that it offered almost double, USD 900 million, but its proposal was not accepted.
Anglo American defended itself by stating that the Chinese group offered a much larger initial payment and under better conditions. This did not prevent the Yldirim group, part of Corex Holding, based in the Netherlands, from raising questions with Cade (Administrative Council for Economic Defense) in Brazil and sending a petition to the European Commission responsible for economic competition issues.
Conflicts in Society Have Worsened With the Energy Transition
Although Jervois' official response to this article states that "the reactivation of the refinery is expected to generate significant economic and social benefits. During construction and commissioning, the project will create hundreds of temporary jobs, and once in stable operation, it is projected to sustain about 450 direct jobs. Between 1,300 and 1,500 indirect jobs, mostly in the São Paulo region," the history of nickel production and extraction in Brazil is problematic.
The narrative of supposed economic return, jobs created, and contribution to development is the tone of every mineral enterprise, in Brazil and worldwide. The reality, however, is much more complex and indicates that the return given to society by mining, in general, is very low. The main mining cities in Brazil do not have a higher level of socioeconomic development than cities without significant mining operations. Many are average, and many are still below the Brazilian median, although, in theory, they live in exceptional situations due to the economic return given by mining. A significant portion of the population in these cities lives below the poverty line, with low health, education, basic sanitation, and infrastructure indices.
Nickel exploration in Brazil also has a problematic history.
At the same time, the Brazilian mineral sector has earned more than BRL 1.5 trillion since the Brumadinho dam collapse in January 2019, owned by Vale, which killed 270 people, a historical record due to a new commodity boom, high average prices in the international market, the pandemic, and the acceleration of the race for critical minerals. The energy transition, so far, has been an excellent business for mining companies, but not so much for society. These issues were deepened, detailed, and discussed in the master's thesis "While Stocks Last: Contradictions of Mining as a Pillar of the Just Energy Transition," published by this author in 2024.
Nickel exploration in Brazil also has a problematic history, especially in Niquelândia, a city in the central-western region of the country, in Goiás, named precisely because of the metal. The town once had a company controlled by Votorantim that caused worker contamination by ammonia, generated during the production of nickel carbonate.
São Miguel Paulista Necessarily Coexists With Environmental Pollution
The district of São Miguel Paulista, where Jervois' refinery is located, has coexisted for decades with pollution caused by the former Companhia Nitro-Química Brasileira, which was part of the Votorantim group, the former owner of the nickel refinery acquired by Jervois. Nitro-Química produced nitrocellulose, hydrofluoric acid, aluminum fluoride, and sulfuric acid, inputs used in mining, metallurgy, chemical, and petrochemical industries.
Since the 1930s, Companhia Nitro Química Brasileira has faced various socio-environmental problems, including discharges of waste into the Tietê River, resulting in a large fish kill, other episodes of environmental contamination, and work accidents, including an explosion in 1997 that killed one employee and injured five others.
The history of contamination and labour problems in São Miguel Paulista, however, raises concerns for the future operation of the remodelled nickel refinery in the same district.
Before that, during the Brazilian military dictatorship, which lasted from 1964 to 1985, Nitro-Química was accused of collaborating with the regime, monitoring employees considered "subversive" and "leftist," undermining union activities, and informing the military regime. In September 2006, a gas leak caused intoxication and turmoil in the centre of São Miguel Paulista, affecting the health of many people in the region. Additionally, the company was investigated by the Environmental Damage Parliamentary Inquiry Commission (CPI) of the São Paulo City Council as one of the city's main polluters in 2009.
Rebranded simply as Nitro, the company remains active, producing industrial assets for agribusiness. The history of contamination and labour problems in São Miguel Paulista, however, raises concerns for the future operation of the remodelled nickel refinery in the same district, which the European Union questionably selected as an essential project.
Environmental Licensing in Brazil Has Just Worsened Drastically
In general conditions and current changes in Brazil have to be taken into account also regarding the ESG assessment of the EU. Whilst the situation at many places is difficult already, the situation risks becoming much worse. The recent change in Brazil's General Environmental Licensing Law places the process under the responsibility of the companies themselves, in many cases, allowing "self-licensing," including "small and medium polluting projects" – a category that encompasses large mining operations and deteriorated dams, as was the case with Brumadinho. In other words, the companies themselves will grant themselves the license.
More than 350 organizations and social movements signed a manifesto against the change in legislation, which "shreds environmental licensing in the country," says a note released by the Climate Observatory.
"The bill represents the collapse of more than 40 years of building environmental legislation. In addition to being legally unsustainable, it compromises the constitutional foundations of environmental policy and violates essential rights, such as access to health and an ecologically balanced environment," the text says. The current environmental licensing scenario in Brazil, however, is already not good. The National Mining Agency has granted thousands of "usage guides" – something that should be exceptional – for companies to operate, in practice, without any licensing, which is being investigated by the Federal Court of Accounts (TCU).
Additionally, mining companies are very skilled at "suggesting" changes in laws, norms, rules, decrees, resolutions, and all kinds of infra-legal norms at the federal, state, and municipal levels, controlling every aspect of environmental licensing. Minas Gerais and Pará are concrete examples of this. A large operation by the Federal Police in Minas Gerais has just dismantled a criminal network formed by dozens of companies, directors of the National Mining Agency itself, a former superintendent of the Federal Police, a former state deputy from Minas, and several high-ranking officials from the state's environmental system, set up precisely to defraud the ecological licensing of various mining projects, causing environmental damage and moving billions of reais.
This assessment indicates that refining and mining in Brazil create huge risks for the environment and human rights.
Another serious point is that the energy transition and critical minerals – a term that emerged in the cauldron of World War I and was revived with a new guise for the 21st century, although it represents the same thing – are the preferred argument for this mineral free-for-all, which will favor "strategic projects" for the industry and supposedly for the country. This was validated by the Lula government through a Provisional Measure, establishing the "Special Environmental License" that will select "strategic projects" for the country, something that has already been happening in mining since 2021 through the Pro-Minerals Strategic Program and giving a maximum response time for licensing of 12 months, which is incompatible with the complexity that a mineral project requires.
This assessment indicates that refining and mining in Brazil create huge risks for the environment and human rights. Moreover, it also highlights the weak assessment criteria of the EU and highly puts into doubt the instrument of strategic projects in terms of ESG standards and even in regard to its economic benefit.
It is key that the EU not only confesses to standards on paper and in narratives but also puts them into action. Moreover, it needs to strengthen measures for resource consumption reduction, such as recycling and changes in mobility. Moreover, Brazil should be aware that weakening environmental licensing risks to sacrifice human rights and the environment.
