A powerful government panel failed Monday to reach consensus on the potential national security risks of a proposed deal worth about $15 billion for Japan’s Nippon Steel Corp. to buy US Steel, leaving the decision to President Joe Biden, who is secretary of state. Longstanding opposition to the deal.
The Committee on Foreign Investment in the United States, known as CFIUS, has sent its long-awaited report on the merger to Mr Biden, who formally announced his opposition to the deal in March this year and now has 15 days to reach a final decision. The White House said. A U.S. official familiar with the matter, who spoke on the condition of anonymity to discuss the special report, said some federal agencies represented on the committee were skeptical that allowing a Japanese company to buy the American-owned steelmaker would create national security risks.
Both Mr. Biden and President-elect Donald Trump have courted unionized workers at US Steel and Pledge to prevent takeover Amid concerns about foreign ownership of a leading American company. However, the economic risk is that Nippon Steel also has the financial resources to invest in and develop plants, which could help maintain steel production within the United States.
The Interagency Committee reviews such deals with an emphasis on potential risks to national security. Monday was the deadline to approve the deal, recommend that Mr. Biden block it or extend the review process.
The Washington Post had previously reported that the Committee on Foreign Investment in the United States had submitted its report.
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Under almost any conditions Cash deal worth $14.9 billionUS Steel will retain its name and headquarters in Pittsburgh, where it was founded in 1901 by J.P. Morgan and Andrew Carnegie. It will become a subsidiary of Nippon Steel, and the combined company will be among the world’s top three steel producers, according to 2023 figures from the World Steel Association.
“It is important for US Steel to remain a domestically owned and operated American steel company,” Biden, with the support of United Steelworkers, said earlier this year.
Trump also opposed the takeover and vowed earlier this month on his Truth Social platform to “prevent this deal from happening.” Trump proposed reviving US Steel’s flagging fortunes “through a series of tax incentives and tariffs.”
The steelworkers union said it did not believe Nippon Steel would retain jobs at unionized plants, meet collectively negotiated benefits, or protect U.S. steel production from cheap foreign imports.
“Our union has been calling for rigorous government scrutiny of the sale since it was announced. Now it’s up to President Biden to determine the best path forward,” Steelworkers President David McCall said in a statement Monday. “We continue to believe this means keeping US Steel locally owned and operated.”
In the face of political opposition, Nippon Steel and US Steel launched a public relations campaign to win over skeptics.
US Steel said in a statement Monday that the deal “is the best way, to date, to ensure US Steel, including its employees, communities and customers, thrives well into the future.”
A growing number of conservatives publicly supported the deal, as Nippon Steel began to win support from some steelworkers union members and local officials around its blast furnaces in Pennsylvania and Indiana. Many supporters said Nippon Steel has a stronger financial balance sheet than rival Cleveland-Cliffs to invest the money needed to modernize aging U.S. steel furnaces.
Nippon Steel pledged to invest $2.7 billion in facilities represented by the United Steelworkers, including US Steel’s blast furnaces, and promised not to import steel sheets that might compete with blast furnaces.
It also pledged to protect US Steel in business matters and not to lay off employees or close plants during the term of the basic labor agreement. Earlier this month, it offered $5,000 in closing bonuses to US Steel employees, which equates to roughly $100 million.
Nippon Steel also said it was better positioned to help American steel compete in an industry dominated by the Chinese.
The proposed sale came during a wave of renewed political support for rebuilding the US manufacturing sector, a presidential campaign in which Pennsylvania was a key battleground state, and a long series of protectionist US tariffs that analysts say have helped revitalize domestic steel.
The Committee on Foreign Investment in the United States, chaired by Treasury Secretary Janet Yellen, examines business deals between American companies and foreign investors, and can block sales or force parties to change the terms of an agreement for the purpose of protecting national security.
The committee’s powers were significantly expanded in 2018 through a law passed by Congress called the Foreign Investment Risk Review Modernization Act, known as FIRRMA.
In September, Biden issued an executive order expanding the factors the committee must consider when reviewing deals — such as how a deal might impact the U.S. supply chain or put Americans’ sensitive personal data at risk.
Nippon Steel already has manufacturing operations in the United States, Mexico, China and Southeast Asia. It supplies the world’s major automakers, including Toyota Motor Corp, and makes steel for railways, pipes, appliances and skyscrapers.
