Nippon Steel confident management freedom ensured in U.S. Steel deal
KYODO NEWS - 7 hours ago - 15:07 | All, Japan, World
Nippon Steel Corp.'s top executive Eiji Hashimoto said Thursday that the U.S. government's role set under its $14.1 billion buyout of United States Steel Corp. "will not hamper" the U.S. unit's business going forward.
At a press conference in Tokyo, Hashimoto said $11 billion of investment in U.S. Steel operations -- 10 times more than the initial plan -- and a golden share issued to the U.S. government that allows it to veto key management decisions among other conditions are rational, even as analysts view them as downside risks to U.S. Steel's management.
"There would be no revival of U.S. Steel in the first place if our activities were restricted," Hashimoto said, a day after the deal was finalized following a year and a half of struggle that saw U.S. President Donald Trump and his predecessor Joe Biden block it.
Under a national security agreement signed with the U.S. government, a U.S. president or a designated official will have the right to approve management decisions, including the closure or idling of U.S. Steel's existing manufacturing facilities.
"It's quite an efficient deal given that we are buying a production capacity of 23 million tons for 2 trillion yen," he said, regarding the purchase price. "Profitability is ensured and (the deal) is satisfactory for both Nippon Steel and U.S. Steel."
Nippon Steel remains the world's fourth-largest steelmaker through the acquisition of U.S. Steel, with their combined production volume in 2024 at 57.82 million tons, behind China Baowu Steel Group Corp., Arcelor Mittal SA and Ansteel Group Corp.
But the output volume comes closer to 59.55 million tons at world No. 3 Ansteel.
Nippon Steel's annual global capacity has increased to 86 million tons through the buyout, approaching its goal of 100 million tons, as it aims to make a foray into Southeast Asia, India and other overseas markets to make up for shrinking domestic demand.
"What the U.S. government expects from us is to maintain and expand production capacity (at U.S. Steel) with the implementation of aggressive investment to increase the product lineup, and we intend to carry out the investment to create jobs and reduce the U.S. deficit," Hashimoto said.
U.S. Steel is of growing strategic importance as higher U.S. tariffs on steel products, introduced by Trump, are likely to remain in place, Hashimoto said, adding the Japanese producer can benefit from growth in U.S. demand for high-grade steel, its specialty, used widely in electric vehicles.
Hashimoto said while his company's acquisition of U.S. Steel should help the world's largest economy, trade levies will not revive its manufacturing sector.
"I believe President Trump came to the conclusion that it is necessary to utilize our power to revive the U.S. steel industry," Hashimoto said.
Under the national security agreement signed with the U.S. government, Nippon Steel also pledged to keep U.S. Steel's headquarters in Pittsburgh.
Related coverage:
Nippon Steel finalizes deal to make U.S. Steel wholly owned
Trump effectively approves Nippon Steel's takeover of U.S. Steel
Trump says U.S. Steel controlled by him with "golden share"
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