Europe’s push for nickel security is running into serious questions. The European Union has designated a shuttered Brazilian refinery as a “strategic project” to secure nickel for industry and the energy transition. But the refinery is controlled by a struggling company with a troubled environmental record, raising doubts about viability, ESG compliance, and real benefits to Europe.
In 2022, the EU drafted its Critical Raw Materials Act, aiming to reduce dependence on China. Strategic projects—both inside and outside Europe—were central to this policy. The first list of projects emerged in 2025, and while high-profile cases like the lithium project in Serbia drew attention, less-known initiatives, such as the São Miguel Paulista (SMP) nickel refinery in Brazil, reveal weaknesses in selection criteria.
Concerns include:
- Viability of the projects
- Actual benefits for Europe’s industry
- Socio-environmental impact on local communities
A Brazilian Refinery in Trouble
The SMP refinery has been inactive since 2016, previously operated by Votorantim Metais, and is now controlled by Australian group Jervois Global, currently under bankruptcy proceedings and judicial recovery. Production is expected to resume only in 2027, at levels below past capacity.
The choice of this refinery seems questionable given Europe’s goal to reduce dependence on China and Indonesia, which dominate nickel processing globally. Unlike rare earths, nickel processing is not highly concentrated, yet Europe’s reliance on a struggling refinery raises alarms.
Jervois Global’s Challenges
Jervois’ CEO, Conor Spollen, and Brazilian executive Carlos Braga face major hurdles:
- Planned nickel production will initially target stainless steel, not batteries for electric vehicles
- Estimated production: 10,000 tons of metallic nickel by 2028, below previous capacity
- Raw materials will likely be imported from Indonesia, limiting Europe’s supply autonomy
While the project may generate local jobs (450 direct, 1,300–1,500 indirect), the strategic value for Europe’s EV battery market is minimal at first.
Environmental and Social Risks in São Miguel Paulista
The district has a long history of industrial pollution, dating back to the Nitro-Química Brasileira operations:
- Waste discharge into the Tietê River, fish kills, and chemical contamination
- Worker accidents, explosions, and union suppression during the military dictatorship
- Ongoing concerns with air, water, and soil contamination
This history raises serious ESG questions about the EU’s designation of the refinery as strategic.
Worsening Licensing and ESG Standards in Brazil
Recent changes in Brazil’s General Environmental Licensing Law allow for self-licensing, even for large mining projects. Critics warn this undermines 40 years of environmental protection, putting human rights, public health, and ecosystems at risk. Reports indicate that mining companies frequently influence legislation and licensing processes, increasing environmental and social risk.
Europe’s Strategic Project Policy Needs a Reality Check
The SMP refinery case illustrates:
- Weak selection criteria for EU strategic projects
- Limited immediate benefit for Europe’s battery and energy transition ambitions
- Significant ESG and human rights risks in host countries
Europe must implement its ESG standards in practice, strengthen recycling and resource efficiency measures, and ensure that external sourcing does not compromise human rights or environmental safety.
