Nippon Steel-U.S. Steel deal will guarantee US government corporate control, Trump and Sen. McCormick say
U.S. Sen. David McCormick said Tuesday that an arrangement that will allow Japan-based Nippon Steel to invest in U.S. Steel will guarantee an American CEO, a majority of board members from the United States and U.S. government approval over certain corporate functions.
The Pennsylvania senator spoke on CNBC, four days after President Trump suggested that an agreement on a "partnership" was at hand to resolve Nippon Steel's nearly $15 billion bid to buy iconic American steelmaker U.S. Steel that has been blocked on national security grounds.
Trump says U.S. Steel will be "controlled by the United States"
Following his statement Friday, Mr. Trump on Sunday told reporters that U.S. Steel will be "controlled by the United States, otherwise I wouldn't make the deal" and that "it's an investment and it's a partial ownership, but it'll be controlled by the U.S.A."
McCormick described the U.S. government's veto as a "golden share" and suggested that the idea was Nippon Steel's proposal.
Nippon Steel has yet to say anything about whether it is willing to accept the concept described by Mr. Trump and McCormick in place of its bid to buy the company.
As it sought to win over American officials amid a national security review, Nippon Steel gradually increased the amount of money it's pledging to invest into U.S. Steel on top of the purchase bid. That amount now comes to $14 billion, according to Mr. Trump, McCormick and Pennsylvania state Sen. Kim Ward, who valued the deal at $28 billion.
That $14 billion investment involves building a new electric arc furnace — a more modern steel mill that melts down scrap — somewhere in the U.S., Ward's office said.
"This is so huge for us and for our region," Ward told KDKA on Tuesday. "It is security for a long time in Pittsburgh, in the southwestern part of the state."
It also directs $2.4 billion into U.S. Steel facilities in the Pittsburgh area, including the Edgar Thomson Works blast furnace just outside Pittsburgh that was built in the 19th century and building a new research and development center at Carnegie Mellon University in Pittsburgh, officials said.
"I hope that all of these workers go to bed tonight and feel really good when they lay their head down on the pillow," Ward said. "The work they have done all these years that made us great, made America great, they are going to be able to continue to do."
Nippon Steel to resolve national security concerns
To resolve national security concerns, McCormick said the deal involves a "national security agreement" that Nippon Steel will sign with the U.S. government.
That entails an American CEO, an American-majority board and a golden share which requires U.S. government approval of a number of the board members that allows the U.S. to ensure that production levels aren't cut, McCormick said.
McCormick said Nippon Steel will have members of the board and the entity will be "part of their overall corporate structure."
He also said Nippon Steel gets what they wanted, which is access to the U.S. market and the benefits of the long-running protectionist U.S. tariffs that analysts say has helped reinvigorate domestic steel.
"I think they know what they're getting into," McCormick said. "They negotiated it. It was their proposal, and I think they saw it as a great strategic move for them and one that's great for the United States."
Many of the aspects outlined by McCormick and Mr. Trump have been floated previously by Nippon Steel.
Keeping U.S. Steel's headquarters had always been part of Nippon Steel's bid to buy it. Nippon had pledged to put U.S. Steel under a board made up of a majority of American citizens, with a management team made up of American citizens.
Nippon Steel also had pledged not to conduct layoffs or plant closings as a result of the transaction, to protect the interests of U.S. Steel in trade matters and that it wouldn't import steel slabs that would compete with U.S. Steel's blast furnaces.
Nippon Steel did issue an approving statement on Friday that said the "partnership between Nippon Steel and U. S. Steel is a game changer." But it didn't describe terms of a deal or say whether it had agreed to any final terms.
U.S. Steel's board and shareholders had approved Nippon Steel's bid, but it was opposed by the United Steelworkers union and was blocked by former President Joe Biden on his way out of office. After Mr. Trump became president, he subjected it to another national security review by the Committee on Foreign Investment in the United States.
The United Steelworkers said Tuesday that it couldn't speculate about a golden share or a partnership. But, it said, it remains concerned that U.S. Steel is a critical producer in a critical domestic industry and that Nippon Steel is a foreign corporation with a long track record of violating U.S. trade laws.
Combining Nippon Steel — the world's 4th largest steel producer — and U.S. Steel — the world's 24th largest — would create the world's 3rd largest steel producer in an industry dominated by China and Chinese companies, according to World Steel Association figures from 2023.
United Steelworkers International President David McCall declined an interview on Tuesday, but he issued a statement, saying in part:
"We can't speculate about the government's reported 'golden share' or anything about the announced 'partnership' without more information."
U.S. Steel-Nippon Steel partnership reaction
From the start, the merger has been met with opposition from the United Steelworkers union, despite growing support from the rank-and-file steelworkers.
Community leaders have said the future of steelmaking in the Mon Valley is at stake, knowing U.S Steel has warned that if the deal doesn't go through, it could begin transferring operations down south and move its headquarters out of Downtown Pittsburgh.
West Mifflin Mayor Chris Kelly said Mr. Trump's announcement last week brought him to tears because he believes the deal will save steelmaking.
"I feel that today we saved steel in Pittsburgh," Kelly told KDKA.
