US Steel is warning of potential mill closures if the Biden administration prevents its sale to Japanese company Nippon Steel.
Meanwhile, Cleveland Cliffs, a competitor, has offered to purchase those mills from US Steel if President Joe Biden blocks the deal.
This week, US Steel announced it may have to shut down mills represented by the United Steelworkers (USW) union unless it secures the $2.7 billion in investments promised by Nippon Steel as part of its proposed $14.3 billion acquisition.
However, both the Biden administration and the USW oppose the deal, preferring that the steelmaker remain under American ownership.
The union has expressed doubts about Nippon Steel’s commitments, noting that the Japanese company has no contract with the USW.
Sources have informed that Biden is likely to block the deal on national security grounds, with an announcement expected as soon as next week.
Cleveland Cliffs previously made an unsolicited $8.3 billion cash and stock offer for US Steel last year, which had the support of the union but was rejected by US Steel.
The nation’s automakers also opposed the Cleveland Cliffs deal, arguing that it would give one company control over 65% to 90% of the steel used in vehicles.
Instead, they backed the Nippon Steel deal. However, this opposition could diminish if the alternative is the closure of the mills.
Cleveland Cliffs has confirmed it has the necessary financing to purchase the integrated steel mills at risk, which produce steel from raw materials.
While the White House has not commented on whether it will block the Nippon Steel deal, Biden has previously expressed criticism of the transaction, as have Vice President Kamala Harris, former President Donald Trump, and his running mate, J.D. Vance.
Cleveland Cliffs CEO Lourenco Goncalves welcomed reports that the deal may be stopped, though no official confirmation has been made.
Goncalves condemned US Steel’s threats to shut down production, lay off union workers, and relocate its headquarters from Pittsburgh if the sale does not proceed.
“This is a pathetic blackmail attempt on the United States government and the Commonwealth of Pennsylvania,” Goncalves said. “Our government’s swift action demonstrates that such shameless behavior will never be tolerated.”
