Nippon, U.S. Steel Sue Over Canceled Steel Merger
Japan’s Nippon Steel and U.S. Steel both filed a lawsuit on January 6 against President Joe Biden after he intervened to cancel a proposed buyout of the latter by the former for about $15 billion. The companies sued in the U.S. Court of Appeals for the District of Columbia, arguing that Biden intervened as a political favor to the United Steelworkers labor union.
“President Biden’s order is the culmination of a months-long campaign to subvert and exploit the United States’ national security apparatus for the purpose of keeping a promise made by the president and his advisers to the USW leadership,” the two steelmakers said in a statement outlining their lawsuit.
U.S. Steel’s plants located on or near a water transportation route include Big River Steel in Osceola, Ark., which U.S. steel bought in 2021 for $774 million in cash. Most of U.S. Steel’s most important facilities use barge transport, including the Gary Works in Indiana, located on Lake Michigan; the Granite City Works in Illinois, located on the Mississippi River; the Clairton Works in Pennsylvania, located along the Monongahela River near Pittsburgh, and the Edgar Thomson Plant, also part of U.S. Steel’s Monongahela River operation. The Fairfield plant, located near Birmingham, Ala., uses the Black Warrior River to transport barged materials.
Biden’s veto came after members of a federal committee tasked with reviewing such deals for national security implications, the Committee on Foreign Investment in the United States (CFIUS), shared security concerns but deadlocked on a decision, asking Biden to decide instead. Biden had announced his opposition to the deal back in March, before CFIUS performed its review. The lawsuit also names CFIUS, whose members include Treasury Secretary Janet Yellen and Attorney General Merrick Garland.
The proposed deal previously sparked significant bipartisan opposition since its announcement a year ago, including from President-elect Donald Trump and his supporters. Trump had threatened to veto the deal, and prominent Republican elected officials wrote letters to CFIUS and to Biden urging its veto.
U.S. Steel and Nippon Steel also filed a second lawsuit in the U.S. District Court for the Western District of Pennsylvania against Cleveland-Cliffs, a rival domestic steelmaker, and its CEO and chairman Lourenco Goncalves, as well as against USW President David McCall. That lawsuit alleges they illegally coordinated efforts to stop the merger. Cleveland-Cliffs, the nation’s largest and oldest independent iron ore company as well as the largest flat-rolled steel producer, itself tried to buy U.S. Steel in 2023.
United Steelworkers President David McCall said, “By blocking Nippon Steel’s attempt to acquire U.S. Steel, the Biden administration protected vital U.S. interests, safeguarded our national security and helped preserve a domestic steel industry that underpins our country’s critical supply chains.”
Goncalves said, “Nippon Steel and U.S. Steel continue to play the blame game in a desperate attempt to distract from their own failures. Today’s lawsuits against the U.S. government, the USW and Cleveland-Cliffs represent a shameless effort to scapegoat others for U.S. Steel’s and Nippon Steel’s self-inflicted disaster.”
