Nippon Steel Clarifies Spending Pledge
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Nippon Steel Corp. clarified its spending plans at U.S. mills owned by United States Steel Corp. as part of last-ditch efforts to win over workers and politicians for its bid to buy the Pittsburgh-based steelmaker.
After meeting with United Steelworkers leaders, the Japanese firm released a letter to U.S. Steel staff on Dec. 9.
In it, the Japanese firm said it made new commitments with regard to where and when a previously announced $1.4 billion would be spent.
The figure doesn’t include maintenance or depreciation, Nippon said.
“We want a future that is strong, and ... to stay in Pennsylvania making steel. Working with Nippon is the best way to do that.” Read the full response from #USSteel’s Andy Macey to a recent Pittsburgh Tribune-Review editorial. #BestDealForAmericanSteel https://t.co/0HbkOus9TW pic.twitter.com/U92I4MncvI — U. S. Steel (@U_S_Steel) December 6, 2024
The latest letter indicates there had been at least some interaction between the parties in recent weeks, with Nippon Steel saying the USW asked for further details about its capital expenditure plans. It’s unclear that this letter will change USW leadership’s long-held official stance of opposing the deal, but it does suggest the Japanese buyer is racing to do anything possible to get approval from the influential union before a federal review is concluded on whether to approve the $14.1 billion takeover.
“During our recent discussions with the USW leadership, we listened carefully to the USW’s requests for further details on our future plans,” Nippon Steel said, adding that after those talks it sent an additional commitment letter to USW President David McCall on Dec. 2 “addressing all the concerns raised.”
The Japanese steelmaker said it released the letter after “constructive dialogue” with Pennsylvania Gov. Josh Shapiro and others, signaling that the Democrat governor — who hasn’t taken a public position on acquisition — is involved in ongoing talks. Collapse of the deal would renew questions about the future of steelmaking in Pennsylvania, where the political outcry has been concentrated.
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“While the final decision on this proposed deal will ultimately be made by the White House alone, the governor will continue to be actively engaged in this process,” a spokesman for Shapiro’s office said Monday in a message to Bloomberg.
Nippon Steel’s letter also makes a previously announced $1.3 billion in additional capital expenditures legally binding. That money had been promised after an arbitration meeting. Nippon Steel is seeking to allay concerns over job security at plants that use traditional blast-furnace production from iron ore as part of its pending transaction.
McCall said the letter “demonstrates its increasing desperation to repackage empty, unenforceable promises,” according to a statement to Bloomberg. “This communication, like those that came before it, remains riddled with the same exceptions and conditions as all its previous so-called commitments, allowing Nippon to back out or shift course for no other reason than changing business plans.”
Both President Joe Biden and President-elect Donald Trump have publicly opposed the deal, which was announced a year ago and remains before federal regulators including a review by the Committee on Foreign Investment in the US, or Cfius. The USW didn’t respond to a request for comment.
US Steel shares rose as much as 3.1% to $39.64 a share Monday in New York, edging closer to Nippon Steel’s $55-a-share offer price. Nippon Steel shares fell as much as 0.6%.
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