In a recent development, U.S. Steel X has indicated that it may consider shutting down its steel mills and potentially relocating its headquarters from Pittsburgh if its proposed sale to Japan’s Nippon Steel NISTF does not materialize.
What Happened: David Burritt, the CEO of U.S. Steel, has stated in an interview that the nearly $3 billion investment pledged by Nippon Steel is vital for keeping the company’s older mills competitive and preserving jobs, The Wall Street Journal reported on Wednesday. However, if the deal falls through, these actions would not be taken due to lack of funds.
” I don't have the money,” Burritt said.
The proposed $14.1 billion deal has faced opposition from several political figures, including Democratic presidential nominee Kamala Harris, President Joe Biden, and Republican presidential nominee Donald Trump. The United Steelworkers union has also expressed its disapproval.
Despite the opposition, Nippon Steel, the world’s fourth-largest steel producer, has committed to nearly doubling its investment in U.S. Steel’s older mills to $2.7 billion over the coming years and refraining from layoffs of hourly workers until 2026.
U.S. Steel, which has been struggling with high costs and low steel prices, has warned that without Nippon Steel’s investment, it may have to shift more production to less capital-intensive operations and potentially close its last steelmaking operation in Pittsburgh.
Why It Matters: Recently, Nippon Steel announced plans to invest an additional $1.3 billion in two U.S. Steel plants to garner support for its $14-billion acquisition bid, which was facing opposition from U.S. unions and politicians.
Vice President Harris expressed her support for American ownership of United States Steel Corporation, amid the ongoing foreign acquisition attempts.
Price Action: At the time of writing, U.S. Steel was trading 1.12% higher in the pre-market on Wednesday, according to Benzinga Pro.
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Image by Heather Schor via Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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