Exclusive-US warned Nippon its US Steel bid poses a national security risk, sources say By Reuters

By Alexandra Alper and David Shepardson

WASHINGTON (Reuters) – The Biden administration told Nippon Steel Corp in a letter on Saturday that its $14.9 billion takeover of U.S. Steel would pose a national security risk by hurting the U.S. steel industry, three people said, adding to evidence that the United States is prepared to block it.

The deal faces opposition from many Democrats and Republicans, with Vice President and Democratic presidential candidate Kamala Harris saying Monday she wants U.S. Steel to remain “American owned and operated.” Her Republican rival Donald Trump has vowed to block the deal if elected.

In the previously unreported letter, the Committee on Foreign Investment in the United States said the deal would harm U.S. steel production and reduce the likelihood that U.S. Steel would continue to aggressively pursue commercial solutions, people familiar with the matter said, adding that the companies were given until Wednesday to respond.

“The committee identified the risks to US national security as a result of this transaction,” one of the sources said in the letter.

In their written response, excerpts of which were seen by Reuters, the companies echoed concerns that U.S. Steel made public on Wednesday. “Rejecting this transaction would result in the shutdown of U.S. Steel’s blast furnace facilities; … likely result in the loss of thousands of jobs; and ultimately weaken the quality and resilience of steel supplies to U.S. industries,” the companies said.

They added that the United States “is acting in this matter not on the basis of facts, law, or the national security interests of the United States, but on the basis of politics and the cynical exploitation of it by third parties.”

The White House declined to comment, and the Treasury Department, which leads CFIUS, did not respond to a request for comment.

Spokespeople for Nippon Steel and U.S. Steel declined to comment on the letter but referred Reuters to previous statements that claimed the deal did not create any national security concerns and would boost the U.S. steel industry.

“We fully expect to pursue all options under the law to ensure the closing of this transaction, which represents the best future for Pennsylvania, the U.S. steel industry and all of our stakeholders,” the U.S. Steel spokesperson added.