Japan’s biggest steelmaker Nippon Steel said on Thursday it plans to make an additional investment of about $1.3 billion in U.S. Steel’s two mills as part of its pending acquisition of the U.S. company.
The spending is on top of the $1.4 billion investment plan through 2026 already pledged as part of the takeover proposal, a company spokesperson said, adding some of the expenditures are expected to occur beyond 2027.
The fresh spending plan includes at least $1 billion to increase the capacity for high-grade steel at Mon Valley Works in Pennsylvania and $0.3 billion to upgrade facilities to extend its production life at Gary Works in Indiana, Nippon Steel said.
Nippon Steel, which clinched the $14.9 billion deal to buy U.S. Steel last December, has committed to spending at least $1.4 billion on maintenance and other capital investments in U.S. Steel’s existing facilities, though details have not been disclosed.
Both steelmakers have received all regulatory approvals outside of the United States for the deal but face political opposition, U.S. regulatory scrutiny, and objections from the powerful United Steelworkers (USW) union, which fears the deal could lead to job losses.
The investments are subject to the closing of the transaction and receipt of any necessary regulatory approvals, Nippon Steel said, adding detailed design and specification will be determined through further engineering studies.
The world’s fourth-biggest steelmaker expects the acquisition deal to close in the second half of 2024.
—Yuka Obayashi, Reuters