- US President says ‘partnership’ with Japan will usher in prosperity
- Nippon may emerge as world’s 3rd largest producer with 66 mnt capacity
In a much-awaited move that is expected to break a years-long deadlock, US President Donald Trump has expressed his support for Japanese steel major Nippon Steel’s bid to acquire US Steel – a major industry acquisition hanging fire over the last several months.
As reported by global news agency Reuters, the US President took to Truth Social to vent his opinions on the contentious $14.9 billion takeover bid floated by Nippon Steel: “This will be a planned partnership between United States Steel and Nippon Steel, which will create at least 70,000 jobs, and add $14 Billion Dollars to the U.S. Economy,” Trump said in a post on Truth Social.
Whether the “partnership” referred to by Trump indicated full takeover of the Pennsylvania-based facility – a legacy asset – by Nippon Steel was not clarified, though. However, Tadashi Imai, President of Nippon Steel, stated to the media that he was hopeful that the acquisition of US Steel was in its “final stage”.
Backdrop
The Committee on Foreign Investment in the US (CFIUS), which reviews deals for national security risks, informed the White House this week that the security risks can be addressed, moving the final decision to the President’s desk.
Following an earlier CFIUS-led review, then-President Joe Biden blocked the deal in January on national security grounds. The main apprehensions were American job losses and the receding of US control over a legacy/strategic asset.
But Trump asked the CFIUS to reexamine the deal on 7 April last. As the 45-day review period of the CFIUS has come to an end, the onus is on the President now to give his final stamp of approval on the deal.
Incidentally, Trump’s endorsement came after Nippon’s oft-repeated guarantees of job creation in the US and foreign investment of nearly $15 billion – a booster shot for the US economy saddled with historically high fiscal debts.
It appears that Trump has given his nod to what would be one of the biggest acquisitions in the global steel industry.
US Steel: What it means for Nippon?
US Steel’s consolidated capacity, including Big River Steel, is over 16 million tonnes (mnt) per annum. Flat rolling capacity is currently over 13 mnt.
The strategic takeover of US Steel would enhance Nippon Steel’s production and capacity and would elevate it to the rank of the world’s third-highest steel producing company. According to Eurometal, the company’s crude steel capacity is poised to increase to 66 mnt.
The US would benefit in two ways: a) growth in domestic steelmaking capacity would enable further employment generation, and b) make the American steel industry self-reliant by reducing import dependency for high-grade steel products – a goal that gels perfectly with Trump’s economic agenda and tariff policy.
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