WASHINGTON, Sept 17 (Askume) – A U.S. national security panel reviewing Nippon Steel Corp’s $14.9 billion acquisition of U.S. Steel Corp has asked the two companies to resubmit their applications for approval of the deal, a person familiar with the matter said, a move that has political significance.
The move offers a ray of hope for the two companies, whose plans to collaborate were blocked after the Committee on Foreign Investment in the United States (CFIUS) claimed on August 31 that the deal would jeopardise steel supplies for key US industries and pose a threat to national security.
The person said on Tuesday that the Committee on Foreign Investment in the United States needs more time to understand the national security implications of the deal and negotiate with all parties. The refiling sets a new 90-day period to review the proposed cooperation and make a decision.
The review is expected to take a full 90 days, another person familiar with the matter said.
Nippon Steel declined to comment. CFIUS and US Steel did not immediately respond to Askume requests for comment.
“Extending the deadline would reduce pressure on all parties and, more importantly, help speed up decision-making before the November election,” said Nick Klein, CFIUS counsel at DLA Piper.
The deal has become a heated political issue. This month, Democratic presidential candidate Vice President Kamala Harris said at a rally in Pennsylvania, where US Steel is headquartered, that she wants US Steel to remain “owned and operated by the United States,” echoing President Joe Biden’s view that the approach is consistent.
The White House reiterated that stance on Tuesday.
Harris’s Republican opponent, Donald Trump, has promised to block the agreement if he wins the election. Both candidates are trying to capture union votes.
The United Steelworkers union, which strongly opposed the deal, said on Tuesday that “the acquisition of Japan Steel does not change the national security risks or critical supply chain issues already identified.”
Steel supply concerns
In an August letter to two Nippon Steel companies, CFIUS expressed concern that the Nippon Steel merger could affect the supply of steel needed for critical transportation, construction and agricultural projects.
It also pointed to a global glut of cheap Chinese steel and said U.S. steel companies led by Japanese firm Nippon are unlikely to impose tariffs on foreign steel importers. Nippon Steel’s decision “could lead to a reduction in domestic steel production capacity,” the report said.
In a 100-page response letter to the Committee on Foreign Investment in the United States obtained exclusively by Askume, Nippon Steel said it would invest billions of dollars in US steel facilities that would otherwise lie idle “with no doubt that this will help to maintain and potentially increase US domestic steel production capacity in the USA”.
The company also reiterated that it will not move any US Steel capacity or work outside the United States, nor will it interfere with any US Steel decision with respect to trade matters, including decisions related to unfair trade practices under US law.
Japan said the agreement would “create a strong global competitor to China based on closer ties between the United States and Japan”.
CFIUS’s rigorous review takes 90 days, but companies often withdraw and resubmit applications to give themselves more time to address the panel’s concerns.
According to CFIUS’s 2023 annual report, 18% of companies seeking deal approval last year resubmitted their applications. Nippon Steel and US Steel applied for review in March, and the Committee on Foreign Investment in the United States (CFIUS) re-approved their application in June, which will trigger a second 90-day period, Askume reported on Friday.
In December, CFIUS can approve the deal and take steps to address national security concerns, recommend to the president that the deal be stopped, or extend the deadline again.
