US Steel has warned that it may have to close several of its steel mills and relocate its headquarters out of Pittsburgh if a proposed $14.1 billion sale to Japan’s Nippon Steel fails to go through, the Wall Street Journal reports.
CEO David Burritt emphasized that the nearly $3 billion investment Nippon Steel has pledged to inject into US Steel’s aging mills is vital for keeping them competitive and preserving jobs.
“If the deal falls through, we won’t be able to make those investments,” Burritt said in a recent interview.
The potential sale, which was announced in December after a lengthy bidding process, has faced growing opposition from political figures and labor leaders. Notably, Democratic vice presidential nominee Kamala Harris recently suggested that US Steel should remain domestically owned, echoing sentiments previously expressed by President Joe Biden and former President Donald Trump. While Harris did not explicitly state that she would block the deal, her comments have been interpreted as a possible obstacle, especially if the regulatory review process extends into the next administration.
Shares of US Steel dropped by 6% on Tuesday, closing at $35.60, as concerns about the deal’s future mounted. Burritt, who has largely avoided public discussion of the sale, described the opposition as “puzzling and confusing,” highlighting the benefits of Nippon Steel’s investment, including the introduction of advanced steelmaking technology to US Steel’s facilities in Gary, Indiana, and Mon Valley, near Pittsburgh.
Despite the mounting opposition, Nippon Steel, the world’s fourth-largest steel producer, has continued to lobby elected officials and union leaders in an effort to secure support for the deal. The Japanese company has recently doubled its investment commitment for US Steel’s older mills to $2.7 billion and has pledged to avoid layoffs of hourly workers through 2026.
US Steel, a company with deep roots in Pittsburgh dating back to 1901, has faced financial difficulties for much of the past decade, only returning to profitability in recent years thanks to higher steel prices. However, the company has been forced to idle parts of its mills and cut its unionized workforce due to declining demand. Burritt indicated that if the Nippon Steel deal fails, US Steel would likely shift more production to its newer, less capital-intensive mill in Arkansas and possibly close the Mon Valley plant, its last remaining steelmaking operation in Pittsburgh.
“If Mon Valley can’t survive into the next decade, there’s no reason for us to stay in Pittsburgh,” Burritt said.
He suggested that the company’s headquarters might move to the South where its production is increasingly concentrated.
Nippon Steel has indicated that it intends to keep US Steel’s headquarters in Pittsburgh if the deal is completed, a factor that helped it secure approval from US Steel shareholders this spring. Burritt noted that this commitment was a key advantage over other bidders, including Cleveland-Cliffs, which had proposed a cash-and-stock offer but lacked a similar promise to maintain the Pittsburgh headquarters.
