Chinese-owned mining firm MMG’s $500-million purchase of Anglo American's Brazilian nickel business has been hit by an in-depth European Union probe after regulators warned that the deal threatens the bloc’s stainless-steel industry.

EU competition chief Teresa Ribera said watchdogs will probe whether the deal “could jeopardize continued and reliable access in Europe” to the supply of ferro-nickel, a key alloying material in stainless steel production.

The firms will now be pressed to come up with solutions that appease regulators’ fears or run the risk of seeing the deal blocked. Officials have until March 20 to come to a final decision.

A joint statement from MMG and Anglo American said that while the firms don’t believe the deal presents competition issues, they’ll work with EU watchdogs to comprehensively address any outstanding questions.

The acquisition of the Anglo business reinforces the strong grip of Chinese companies over global nickel supply. MMG is Hong Kong-listed but its controlling shareholder is state-owned mining-to-trading giant China Minmetals. As well as in the EU, the deal has attracted criticism across the Atlantic, with the American Iron and Steel Institute pressing the White House to intervene over claims it could give China greater control over global nickel reserves.

The firms made an earlier effort to dodge a full-scale EU probe with a commitment for Anglo to purchase from MMG supplies of ferro-nickel from Codemin and Barro Alto mines in Brazil, but regulators deemed the remedy as insufficient. Bloomberg earlier reported the plan to open a deeper investigation.

So-called Phase 2 EU probes typically add about 90 working days to deal reviews – but can drag on, for example if regulators stop the clock to demand further data. The EU’s antitrust arm usually demands robust remedies to solve competition concerns but sometimes also decide to give their unconditional approval if initial concerns are shown to be unfounded.