Nippon Steel Set To Invest $14 Billion In US Steel
Nippon Steel Set To Invest $14 Billion In US Steel
It includes $1 billion in funding for a greenfield site
Nippon Steel plans to infuse $14 billion in US Steel's operations, including $4 billion in a new steel mill, by 2028. However, it is subject to the approval of President Donald Trump’s administration.
The funding includes $1 billion in a green field site, expected to grow by $3 billion over the years.
The investment (initially totalling $1.4 billion) was increased to win the approval, which drew the ire of President Joe Biden and later President Trump.
The companies face a May 21 deadline for the completion of a fresh review of the proposed tie-up, blocked by President Biden on national security grounds early this year.
President Trump will have 15 days to decide the fate of the transaction. It is vague if the investment worth billions will be enough to sway him.
However, Nick Klein, a lawyer at DLA Piper, said that the promise of enhanced investment was likely to entice the new administration.
He added, "Increased investment to expand steel production in the United States is critical to our national security.”
The offer signifies how far Nippon Steel is willing to go to bag the deal, with a $565 million break-up fee and current US steel tariffs of 25 percent, to access the thriving American steel markets.
In 2023, Nippon Steel offered $14.9 billion for US Steel to capitalize on purchases. But the tie-up faced opposition from the outset. Both Biden and Trump stressed that US Steel should remain American-owned. The reason was, they could woo Pennsylvania voters, where the company is headquartered.
In August 2024, Nippon Steel added investment to make the deal attractive. It raised the funds from $1.4 billion to $2.7 billion, promising not to uproot its headquarters.
However, Biden's blocking of the deal on national security grounds led to lawsuits by companies. They alleged the rules were biased, but the White House disputed the contention.
On Trump’s win, the two steel giants saw a new opportunity and opened a 45-day national security review into the proposed merger.
But the President’s comments, from welcoming a simple ‘investment’ in the US. Steel by the Japanese firm to float a minority stake in Nippon Steel did little to boost investors’ confidence. In fact, some lawmakers from his party attributed Nippon Steel's increased investment to President Trump.
Kim Ward, a Republican Pennsylvania state senator and staunch advocate for the deal's approval, remarked, "The President has brought life back into the partnership by giving it a second chance.”
Meanwhile, Nippon Steel’s Vice Chairman Takahiro Mori was recently in Washington to meet US officials to win the approval.
