WASHINGTON: Nippon Steel’s US$15 billion bid for US Steel has been referred to US President Joe Biden, a White House spokesman said, giving the president 15 days to decide on a tie up he has previously said he opposes.
The Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investments in the US for national security risks, referred the bid to Biden after it was unable to reach a consensus.
“We received the CFIUS evaluation and the President will review it,” White House spokesperson said. President-elect Donald Trump, set to retake the office on Jan 20, has also opposed the deal, which was first announced last December.
Nippon Steel said on Tuesday it was informed of the CFIUS letter.
“We urge him (Biden) to reflect on the great lengths that we have gone to address any national security concerns that have been raised and the significant commitments we have made to grow US Steel,” Nippon Steel said in a statement.
Nippon Steel and US Steel have previously said they planned to close the deal before the end of 2024.
The Washington Post first reported the referral to Biden on Monday.
CFIUS said on Monday that allowing Nippon Steel to take over US Steel could result in lower domestic steel production representing “a national security risk”, according to the Washington Post.
Nippon Steel said it could eliminate that risk by appointing US citizens to top management and board of director positions at US Steel, but the committee was divided in its view of whether those remedies would be sufficient, said the newspaper.
The US Treasury Department, which leads CFIUS, and the Commerce Department, declined to comment.
The deal, essential for Nippon Steel’s expansion globally, has also faced opposition from the United Steelworkers, a powerful labour union that was key for both Democrats and Republicans in the swing state of Pennsylvania during the Nov 5 presidential elections.
The union is concerned Nippon Steel may import steel into the US from its international mills, eroding a company that helped build the Empire State Building and armed allied forces in World War Two.
Nippon Steel has previously denied it will use the deal as cover to import steel and has made a series of pledges to protect jobs and invest in US facilities it sees as key to its future growth.
“The US Steel deal is a once-in-a-lifetime opportunity for Nippon Steel to drive its growth,” said SBI Securities analyst Ryunosuke Shibata.
The US is the only developed nation where domestic steel demand is increasing, with the highest steel prices globally due to production capacity falling short of domestic needs, he added.
With US Steel, Nippon Steel aimed to raise its global steel production capacity to 85 million metric tons per year from 65 million tons now and the asset is core to its goal of lifting production capacity to more than 100 million tons in the long-term.
Nippon Steel faces a US$565 million penalty to US Steel if the deal collapses, which would also be a major blow to the Japanese steelmaker’s overseas expansion. It has earlier said it could pursue legal action against the US government if the deal falls apart.
With Japan being the largest foreign investor to the US, Japanese Prime Minister Shigeru Ishiba last month sent a letter to Biden asking him to approve Nippon Steel’s acquisition of US Steel.
“The transaction … enhances US national and economic security through investment in manufacturing and innovation – by a company based in one of the United States’ closest allies – and forges an alliance in steel to combat the competitive threat from China,” US Steel said in a statement.
