The European Union’s efforts to secure a reliable nickel supply for its industries and the energy transition are encountering critical challenges. The EU has identified the São Miguel Paulista (SMP) nickel refinery in Brazil as a strategic asset, yet this facility is currently managed by Jervois Global, a company grappling with bankruptcy and an unfavorable environmental track record. This situation raises substantial concerns regarding the refinery’s viability and its potential to deliver real benefits to Europe.
In 2022, the EU introduced the Critical Raw Materials Act to diminish reliance on Chinese sources, emphasizing strategic projects both within Europe and abroad. While initiatives like lithium extraction in Serbia have garnered attention, the selection of the SMP refinery highlights potential flaws in the EU’s project evaluation criteria. The refinery’s troubled history and uncertain future raise questions about its capacity to contribute effectively to Europe’s supply chain.
Key issues surrounding the SMP refinery include its operational viability, the tangible advantages it offers for European industries, and the socio-environmental impact on local communities. The refinery has been inactive since 2016 and is not expected to resume production until 2027, operating at reduced levels compared to its previous capacity. This delay complicates Europe’s strategy to reduce dependence on dominant nickel processors like China and Indonesia.
Jervois Global’s leadership faces significant obstacles as they plan to produce nickel primarily for stainless steel rather than for electric vehicle batteries. Projected output is limited to 10,000 tons of metallic nickel by 2028, which falls short of previous production levels. Moreover, raw materials are likely to be sourced from Indonesia, which undermines Europe’s goal of achieving supply autonomy.
While the project may create local employment opportunities—estimated at 450 direct jobs and up to 1,500 indirect jobs—the strategic relevance for Europe’s burgeoning electric vehicle market appears minimal initially. The environmental and social ramifications of resuming operations at SMP are also concerning. The area has a history of industrial pollution linked to past operations that have caused significant ecological damage and health risks.
Recent amendments to Brazil’s General Environmental Licensing Law have raised alarms about self-licensing practices that could jeopardize decades of environmental protections. Critics argue that these changes allow mining companies undue influence over regulatory processes, heightening risks associated with human rights and public health.
The case of the SMP refinery underscores several weaknesses in the EU’s approach to selecting strategic projects. The criteria used appear inadequate given the limited immediate benefits for Europe’s energy transition goals and the heightened ESG risks involved in sourcing from countries with lax regulations. To effectively address these challenges, Europe must ensure that its ESG standards are rigorously applied, enhance recycling initiatives, and prioritize resource efficiency without compromising human rights or environmental safety.
