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Nippon Steel (OTC:NISTF) (OTC:NPSCY) has announced plans to invest an additional $1.3 billion in two U.S. Steel (NYSE:X) plants, in an effort to garner support for its $14-billion acquisition bid, which is currently facing opposition from U.S. unions and politicians.
What Happened: The Japanese steelmaker had previously committed $1.4 billion towards U.S. Steel in March, and the newly announced investment is separate from the earlier commitment, bringing the total additional commitment to $2.7 billion. The new investment is expected to continue beyond 2026, Nikkei Asia reported on Thursday.
The investment plan includes two major capital investments aimed at extending the operational life of the U.S. Steel plants. At Mon Valley Works in Pennsylvania, Nippon Steel will invest “no less than $1 billion” to enhance the facility’s competitiveness. At Gary Works in Indiana, the company will invest approximately $300 million to revamp the blast furnace, extending the plant’s operational life by up to 20 years.
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Why It Matters: The deal, initially expected to close by mid-2024, faced opposition from the United Steelworkers and President Joe Biden, with a national security review potentially extending into 2025. The United Steelworkers union has expressed skepticism about Nippon Steel’s commitment, stating that the company “talks a big game,” but “a press release is not a contract.” The union added that Nippon Steel “still needs to answer to pressing concerns regarding our critical supply chains and national security.”
This announcement comes after the Vice Chairman of Nippon Steel, Takahiro Mori, made multiple visits to the U.S. to continue discussions on the proposed acquisition of U.S. Steel.
Despite support from U.S. Steel's management, the deal has faced resistance from the White House and the United Steelworkers union. Nippon Steel’s recent investment in Australian miner Whitehaven Coal further underscores the company’s commitment to securing a long-term supply of high-quality coal for its steel production.
In December 2023, Nippon Steel announced its intention to acquire U.S. Steel for more than $14 billion, with the transaction expected to close in the second half of 2024.
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Photo by Dennis Diatel on Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
