HARRISBURG, Pa. (AP) — U.S. Sen. David McCormick said Tuesday that an arrangement that will allow Japan-based Nippon Steel to invest in U.S. Steel will guarantee an American CEO, a majority of board members from the United States and U.S. government approval over certain corporate functions.
The Pennsylvania senator spoke on CNBC, four days after President Donald Trump suggested that an agreement on a “partnership” was at hand to resolve Nippon Steel’s nearly $15 billion bid to buy iconic American steelmaker U.S. Steel that has been blocked on national security grounds.
Following his statement Friday, Trump on Sunday told reporters that U.S. Steel will be “controlled by the United States, otherwise I wouldn’t make the deal” and that “it’s an investment and it’s a partial ownership, but it’ll be controlled by the U.S.A.”
McCormick described the U.S. government’s veto as a “golden share” and suggested that the idea was Nippon Steel’s proposal.
Nippon Steel has yet to say anything about whether it is willing to accept the concept described by Trump and McCormick in place of its bid to buy the company.
As it sought to win over American officials amid a national security review, Nippon Steel gradually increased the amount of money it’s pledging to invest into U.S. Steel on top of the purchase bid. That amount now comes to $14 billion, according to Trump, McCormick and Pennsylvania state Sen. Kim Ward, who valued the deal at $28 billion.
That $14 billion investment involves building a new electric arc furnace — a more modern steel mill that melts down scrap — somewhere in the U.S., Ward’s office said.
It also directs $2.4 billion into U.S. Steel facilities in the Pittsburgh area, including the Edgar Thomson Works blast furnace just outside Pittsburgh that was built in the 19th century and building a new research and development center at Carnegie Mellon University in Pittsburgh, officials said.
“They kept doing everything they could, they offered everything they could to make the investment better for the Trump administration and President Trump’s review,” said U.S. Rep. Dan Meuser, who met last week with Trump to discuss the deal.
To resolve national security concerns, McCormick said the deal involves a “national security agreement” that Nippon Steel will sign with the U.S. government.
That entails an American CEO, an American-majority board and a golden share which requires U.S. government approval of a number of the board members that allows the U.S. to ensure that production levels aren’t cut, McCormick said.
McCormick said Nippon Steel will have members of the board and the entity will be “part of their overall corporate structure.”
He also said Nippon Steel gets what they wanted, which is access to the U.S. market and the benefits of the long-running protectionist U.S. tariffs that analysts say has helped reinvigorate domestic steel.
“I think they know what they’re getting into,” McCormick said. “They negotiated it. It was their proposal, and I think they saw it as a great strategic move for them and one that’s great for the United States.”
Many of the aspects outlined by McCormick and Trump have been floated previously by Nippon Steel.
Keeping U.S. Steel’s headquarters had always been part of Nippon Steel’s bid to buy it. Nippon had pledged to put U.S. Steel under a board made up of a majority of American citizens, with a management team made up of American citizens.
Nippon Steel also had pledged not to conduct layoffs or plant closings as a result of the transaction, to protect the interests of U.S. Steel in trade matters and that it wouldn’t import steel slabs that would compete with U.S. Steel’s blast furnaces.
Nippon Steel did issue an approving statement on Friday that said the “partnership between Nippon Steel and U. S. Steel is a game changer.” But it didn’t describe terms of a deal or say whether it had agreed to any final terms.
U.S. Steel’s board and shareholders had approved Nippon Steel’s bid, but it was opposed by the United Steelworkers union and was blocked by former President Joe Biden on his way out of office. After Trump became president, he subjected it to another national security review by the Committee on Foreign Investment in the United States.
The United Steelworkers said Tuesday that it couldn’t speculate about a golden share or a partnership. But, it said, it remains concerned that U.S. Steel is a critical producer in a critical domestic industry and that Nippon Steel is a foreign corporation with a long track record of violating U.S. trade laws.
Combining Nippon Steel — the world’s 4th largest steel producer — and U.S. Steel — the world’s 24th largest — would create the world’s 3rd largest steel producer in an industry dominated by China and Chinese companies, according to World Steel Association figures from 2023.
This story was originally featured on Fortune.com
