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Released January 06, 2025 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--In a move that could affect the strategic and growth investment designed to support United States Steel Corporation (NYSE:X) (U.S. Steel) (Pittsburgh, Pennsylvania), U.S. President Joe Biden said Friday he is blocking Japan-based Nippon Steel Corporation's (Tokyo) $15 billion takeover of U.S. Steel to promote a domestically owned and operated steel industry and protect national security.
Joe Govreau, Industrial Info's vice president of research for Metals & Minerals, said the deal would have been good for U.S. Steel and the market in general. "On top of the $15 billion acquisition price, Nippon committed an additional $1.5 billion to modernize some of the older U.S. Steel assets and technology."
Govreau said steel production will be unaffected by Biden's decision and will continue to follow market demand fundamentals.
In a statement, Biden said, "We need major U.S. companies representing the major share of U.S. steelmaking capacity to keep leading the fight on behalf of America's national interests. As a committee of national security and trade experts across the executive branch determined, this acquisition would place one of America's largest steel producers under foreign control and create risk for our national security and our critical supply chains."
In a joint statement, Nippon and U.S. Steel expressed their opposition to the president's decision. "We are dismayed by President Biden's decision to block Nippon Steel's acquisition of U.S. Steel, which reflects a clear violation of due process and the law governing CFIUS [The Committee on Foreign Investment in the United States]."
The CFIUS failed to reach a consensus on the deal last month and sent the decision back to the president. "Instead of abiding by the law, the process was manipulated to advance President Biden's political agenda," the statement said.
The companies said they "are confident that our transaction would revitalize communities that rely on American steel, including in Pennsylvania and Indiana, provide job security for American steelworkers, enhance the American steel supply chain, help America's domestic steel industry compete more effectively with China and bolster national security."
They said they plan to take all appropriate action to protect their legal rights.
The entities elaborated on Nippon Steel's planned investment into U.S. Steel: "Nippon Steel is the only partner both willing and able to make the necessary investments -- including at least $1 billion to Mon Valley Works and approximately $300 million to Gary Works as a part of $2.7 billion in investment that it has already committed."
According to an August press release from Nippon Steel, investment at the Mon Valley Works in Pennsylvania would go toward replacing and/or upgrading the existing hot strip mill and other facilities at the site. The Mon Valley Works includes the Edgar Thomson plant, the Irvin Steel plant and Clairton Coke plant. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Plant Database can click here for the related plant profiles.
The $300 million investment at Gary Works in Indiana would be solely attributed to the complete revamp/rebuild of blast furnace #14, which is planned to take place in 2026. The project is expected to extend the facility's operational life by up to 20 years. Subscribers can click here for more project information and here for a plant profile.
David McCall, international president of the United Steelworkers (USW) union, which includes 11,000 U.S. Steel employees, applauded Biden's decision: "As the proposed transaction was under review, our union's first and only concern has been the long-term viability of our facilities as we look to ensure a strong domestic steel industry well into the future."
"It's clear from U.S. Steel's recent financial performance that it can easily remain a strong and resilient company. We now call on U.S. Steel's board of directors to take the necessary steps to allow it to further flourish and remain profitable."
Earlier this year, U.S. Steel raised its 2024 capital expenditures to $2.3 billion due to cost overruns, with a plan of $1 billion in 2025.
The steelmaker's third-quarter 2024 financial results, released October 31, showed an earnings decline year-over-year, which it attributed to weaker average selling prices across all the company's operating segments; but President David B. Burritt said in the related earnings conference call that the results "demonstrated resilience in our business model."
"The North American Flat-Rolled segment continued to benefit from a strong commercial strategy that leveraged a diverse product mix and a purposeful increase in contracted volumes across the end markets we serve," he said. "Our Mini Mill segment, which was impacted by softening market pricing, delivered 11% EBITDA [earnings before interest, taxes, depreciation and amortization] margins when adjusting for $40 million in one-time startup costs for strategic projects."
Burritt highlighted one of those strategic projects, saying the company produced the first coil at its steel minimill addition at its Big River steel complex in Osceola, Arkansas, with first shipments from the 3-million-ton capacity set to begin during the fourth quarter and volumes increasing into 2025. U.S. Steel also has added a 325,000-ton-per-year galvanizing line at the site. Subscribers can learn more by viewing the project reports about the new minimill and galvanizing line addition.
Subscribers can click here for a full list of active and planned projects from U.S. Steel.
It remains to be seen how President-elect Donald Trump will handle the fate of the acquisition, although he said last month that he would block the deal and restore the United States Steel Corporation through tax incentives and tariffs.
Nippon in May delayed the close of the U.S. Steel acquisition after the U.S. Department of Justice requested more information. The deal was first announced in December 2023. For more information, see May 7, 2024, article - Nippon Steel Postpones U.S. Steel Acquisition.
Subscribers to the GMI Project and Plant databases can click here for a look at all of the project reports discussed in this article and here for the plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Joe Govreau, Industrial Info's vice president of research for Metals & Minerals, said the deal would have been good for U.S. Steel and the market in general. "On top of the $15 billion acquisition price, Nippon committed an additional $1.5 billion to modernize some of the older U.S. Steel assets and technology."
Govreau said steel production will be unaffected by Biden's decision and will continue to follow market demand fundamentals.
In a statement, Biden said, "We need major U.S. companies representing the major share of U.S. steelmaking capacity to keep leading the fight on behalf of America's national interests. As a committee of national security and trade experts across the executive branch determined, this acquisition would place one of America's largest steel producers under foreign control and create risk for our national security and our critical supply chains."
In a joint statement, Nippon and U.S. Steel expressed their opposition to the president's decision. "We are dismayed by President Biden's decision to block Nippon Steel's acquisition of U.S. Steel, which reflects a clear violation of due process and the law governing CFIUS [The Committee on Foreign Investment in the United States]."
The CFIUS failed to reach a consensus on the deal last month and sent the decision back to the president. "Instead of abiding by the law, the process was manipulated to advance President Biden's political agenda," the statement said.
The companies said they "are confident that our transaction would revitalize communities that rely on American steel, including in Pennsylvania and Indiana, provide job security for American steelworkers, enhance the American steel supply chain, help America's domestic steel industry compete more effectively with China and bolster national security."
They said they plan to take all appropriate action to protect their legal rights.
The entities elaborated on Nippon Steel's planned investment into U.S. Steel: "Nippon Steel is the only partner both willing and able to make the necessary investments -- including at least $1 billion to Mon Valley Works and approximately $300 million to Gary Works as a part of $2.7 billion in investment that it has already committed."
According to an August press release from Nippon Steel, investment at the Mon Valley Works in Pennsylvania would go toward replacing and/or upgrading the existing hot strip mill and other facilities at the site. The Mon Valley Works includes the Edgar Thomson plant, the Irvin Steel plant and Clairton Coke plant. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Plant Database can click here for the related plant profiles.
The $300 million investment at Gary Works in Indiana would be solely attributed to the complete revamp/rebuild of blast furnace #14, which is planned to take place in 2026. The project is expected to extend the facility's operational life by up to 20 years. Subscribers can click here for more project information and here for a plant profile.
David McCall, international president of the United Steelworkers (USW) union, which includes 11,000 U.S. Steel employees, applauded Biden's decision: "As the proposed transaction was under review, our union's first and only concern has been the long-term viability of our facilities as we look to ensure a strong domestic steel industry well into the future."
"It's clear from U.S. Steel's recent financial performance that it can easily remain a strong and resilient company. We now call on U.S. Steel's board of directors to take the necessary steps to allow it to further flourish and remain profitable."
Earlier this year, U.S. Steel raised its 2024 capital expenditures to $2.3 billion due to cost overruns, with a plan of $1 billion in 2025.
The steelmaker's third-quarter 2024 financial results, released October 31, showed an earnings decline year-over-year, which it attributed to weaker average selling prices across all the company's operating segments; but President David B. Burritt said in the related earnings conference call that the results "demonstrated resilience in our business model."
"The North American Flat-Rolled segment continued to benefit from a strong commercial strategy that leveraged a diverse product mix and a purposeful increase in contracted volumes across the end markets we serve," he said. "Our Mini Mill segment, which was impacted by softening market pricing, delivered 11% EBITDA [earnings before interest, taxes, depreciation and amortization] margins when adjusting for $40 million in one-time startup costs for strategic projects."
Burritt highlighted one of those strategic projects, saying the company produced the first coil at its steel minimill addition at its Big River steel complex in Osceola, Arkansas, with first shipments from the 3-million-ton capacity set to begin during the fourth quarter and volumes increasing into 2025. U.S. Steel also has added a 325,000-ton-per-year galvanizing line at the site. Subscribers can learn more by viewing the project reports about the new minimill and galvanizing line addition.
Subscribers can click here for a full list of active and planned projects from U.S. Steel.
It remains to be seen how President-elect Donald Trump will handle the fate of the acquisition, although he said last month that he would block the deal and restore the United States Steel Corporation through tax incentives and tariffs.
Nippon in May delayed the close of the U.S. Steel acquisition after the U.S. Department of Justice requested more information. The deal was first announced in December 2023. For more information, see May 7, 2024, article - Nippon Steel Postpones U.S. Steel Acquisition.
Subscribers to the GMI Project and Plant databases can click here for a look at all of the project reports discussed in this article and here for the plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
