Nippon Steel pledges $1 billion to Mon Valley Works pending U.S. Steel acquisition as government opposition continues
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Nippon Steel will spend $2.7 billion through 2026 to upgrade steel plants if its plan to acquire U.S. Steel comes to fruition.
The Japanese company announced Wednesday at least $1 billion would be used to replace or upgrade the West Mifflin hot strip mill and other facilities to improve yield and product quality and increase energy efficiency.
The announcement comes at a time when some of the region’s congressional leaders continue to oppose government approval.
“Nippon Steel plans to ensure Mon Valley Works operates for decades to come and will undertake the necessary investments so that it remains viable and provides jobs for future generations of steelworkers in Pennsylvania,” the company said in a statement.
About $300 million would be spent on the Gary Works steel plant in Indiana, the statement said.
Nippon Steel previously pledged to invest $1.4 billion into facilities staffed by members of the United Steelworkers Union. It announced in December its plans to purchase U.S. Steel in a $14.9 billion deal, emphasizing the company’s headquarters would remain in Pittsburgh.
The transaction is expected to be completed before the end of the year, according to Nippon Steel.
Although 99% of U.S. Steel’s voting shareholders approved the deal in April, closing is delayed as the U.S. Department of Justice awaits further documentation related to the deal.
President Joe Biden opposed the sale in March, saying the U.S. needs to “maintain strong American steel companies powered by American steelworkers.”
Some of the loudest calls to nix the deal have come from Pennsylvania politicians.
Sen. John Fetterman said at a campaign event Tuesday in Collier Township that he was skeptical of the timing of the pledged investment, given the political backlash Nippon and U.S. Steel has faced following the proposed sale.
In June, Fetterman and Sen. Bob Casey, both Democrats, joined in a letter that urged the administration to block the proposed sale, citing threats to trade enforcement.
U.S. Steel canceled a planned $1 billion investment plan for its Mon Valley Works in 2021.
“Coincidentally Nippon, they happened to find an extra one-and-a-half billion dollars to perform upgrades at Edgar Thomson Works,” Fetterman said Tuesday, referring to the steel mill in Braddock that is across the street from his home.
U.S. Rep. Chris Deluzio has expressed national security concerns surrounding the proposed sale.
Ultimately, it’s not up to Congress, Kristin Kanthak, a political science professor at the University of Pittsburgh, said in an earlier interview. Only Biden or the Department of Justice could block the sale.
But pressure from the congressional Committee on Foreign Investment in the United States could impact whether Biden reaches for the Defense Production Act to block it, she said.
The steelworkers union urged its members to remain cautious of the financial commitment.
“Nippon talks a big game, but at the end of the day, a press release is not a contract,” read a statement from United Steelworkers. “Even as it pays lip service to one of the union’s ongoing concerns, Nippon continues to duck the USW’s input.”
The spending plan surpasses what U.S. Steel could commit to steel plants on its own, said U.S. Steel president and CEO David Burritt.
“The bottom line is these are investments in the future of integrated American steelmaking, and the employees, families and communities that rely on it,” Burritt said in a statement. “U.S. Steel will be a much stronger company as a result of the transaction and these investments — the entire American steel industry will be stronger and more globally competitive, too.”
The $2.7 billion spending plan is meant to expand upon U.S. Steel’s portfolio, said Takahiro Mori, representative director and vice chairman for Nippon Steel.
“The investments announced today will help make U.S. Steel’s blast furnace facilities more productive and environmentally sustainable as we seek to provide the highest-quality American-made steel products to American customers, fueled by American workers,” Mori said in a statement, “while also securing American steel supply for the future.”