US lawmakers voice opposition to Nippon's proposed acquisition of US Steel

Several US lawmakers have voiced opposition to Nippon Steel's proposed acquisition of US Steel, with some saying the deal should be blocked by the US government, according to statements issued this week.

The proposed deal, made public Dec. 18, would see Japan's largest steelmaker acquire all of US Steel's steelmaking and iron ore assets in the US as well as its USS Kosice operations in Slovakia for a purchase price of more than $14 billion.

The move would further diversify Nippon Steel's global footprint by significantly expanding its current production, also accelerating its progress towards its strategic goal of 100 million mt/year of global crude steel capacity, the company said. Upon its close, the combined Nippon-US Steel would be the world's third-largest steel producer, taking its annual crude steel production to 86 million mt/year.

However, a growing number of lawmakers have voiced concern in the wake of the deal of foreign ownership taking over a US-based steelmaker.

In a letter sent to US Treasury Secretary Janet Yellen Dec. 19, Republican Senators JD Vance, Marco Rubio and Josh Hawley said the Committee on Foreign Investments in the US, of which Yellen serves as chair, should block the acquisition of US Steel by Nippon.

The Senators state that the transaction was "not entered into with US national security in mind" and pointed to the Section 232 tariffs on foreign steel, enacted as a national security measure by former President Donald Trump in March 2018 and maintained today, as a reason for scrutiny.

"Allowing foreign companies to buy out American companies to enjoy our trade protections subverts the very purpose for which these protections were put in place," the letter states. "...We urge [CFIUS] to initiate a review of the transaction unilaterally, particularly in light of the fact that US Steel received competitive bids from American companies who would not pose the same risks."

Democrats also have voiced concern over the deal, with Sen. John Fetterman, whose home in Braddock, Pennsylvania, stands across the street from US Steel's Edgar Thomson Plant, speaking out against the deal in a post to X, formerly known as Twitter, Dec. 18.

"Steel is always about security and I am committed to doing anything I can do, from using my platform to my position, in order to block this," Fetterman said.

Fetterman and Congressional Democrats from Pennsylvania, Sen. Bob Casey, Rep. Summer Lee and Rep. Chris Deluzio, sent a letter to Nippon's president Eiji Hashimoto Dec. 18, seeking further clarity on the proposed deal and its potential impacts to the state's industrial base and workers. The lawmakers represent the Pittsburgh area, where US Steel is headquartered and operates its Mon Valley Works and research and technology center.

Rep. Frank Mrvan, a Democrat who represents Northwest Indiana where US Steel operates and serves as co-chairman of the Congressional Steel Caucus, said he "will be adamant to ensure all federal antitrust regulators and the Committee on Foreign Investment in the United States are scrupulous in their assessment of this transaction," in a statement Dec. 18.

When asked how the White House views the proposed deal at a Dec. 19 press conference, press secretary Karine Jean-Pierre said she could not speak to the specifics of the transaction as it could potentially be under regulatory review.

"What I can do is speak about it more broadly, and one of the things that I can share [is] that the President believes is that Steelworkers' commitment to protecting American manufacturing that supports family-sustaining union jobs — that is something that the President supports," Jean-Pierre said. "That is something that the President certainly shares with Steelworkers. But I'm going to be super mindful and certainly not comment on the review."

The United Steelworkers union, which supported a bid by US-based Cleveland-Cliffs for the company, issued a statement Dec. 18, opposing US Steel's deal with Nippon.

"The combination of NSC and US Steel will create a stronger, more competitive global company, better positioned to serve all employees and customers," US Steel said in a statement Dec. 21. "US Steel, and the country, will benefit from the investment and technologies contributed to it by NSC. Both US Steel and NSC share a commitment to decarbonization. The deal supports US Steel's electrical steel growth, decarbonization technology development and continued innovation in automotive steels."

"US Steel products will remain mined, melted and made in America, and the company's headquarters will remain in Pittsburgh, Pennsylvania, supporting roughly 3,000 union jobs in the state and nearly 1,000 non-union jobs in Western Pennsylvania. NSC believes that maintaining the combined workforce is critical to operations in the United States, and they are committed to partnering with the USW and honoring all collective bargaining agreements."

Tariffs, quotas increase regionalization

All of the tariffs, quotas and other trade measures enacted by the US and other countries is resulting in the increasing regionalization of the steel industry, according to S&P Global Commodity Insights senior analyst for metals and mining Paul Bartholomew.

"The number of international companies participating in the US steel market shows what an important market it is, as can be seen from the proposed Nippon Steel takeover," he said. "There is plenty of upside in the US steel market, particularly around new technologies, special steel and auto," Bartholomew said.

In addition to synergies between Nippon and US Steel in around auto sheet, as well as the opportunity for technical development aimed at products supplying electric vehicles, the Asia market is not seeing the same growth, he noted.

"Other regions and countries, such as Southeast Asia, haven't yet offered as much growth as was expected, while there isn't going to be any additional growth in mature steel markets such as South Korea and Japan, which is why companies there are looking offshore," Bartholomew said.