SteelWatch reacts to the White House blocking Nippon Steel’s acquisition of the U.S. Steel
Nippon Steel was offering a bad deal for the climate. Now that deal has sunk, it’s time for the world’s fourth largest steel maker to rethink.
In a desperate attempt to close the 14.9 billion USD purchase of U.S. Steel, Nippon Steel announced an additional investment of 2.7 billion USD to upgrade U.S. Steel’s aging facilities, including relining its coal-fired blast furnaces to keep them running. Investing in coal-based steelmaking would have locked in huge emissions for decades to come. It’s notable that United Steelworkers were not convinced that this offer would secure a competitive future.
Nippon Steel’s coal-based strategy has proved unfit for the future. Whatever happens to the U.S. Steel assets next, relining the aging blast furnaces should not be part of the plan.
Nippon Steel’s failed bid for U.S. Steel should be a wake up call that it is on the wrong path, and needs to urgently update its plans to transform its business to be completely fossil-free.
Nippon Steel now has lots of spare cash to invest, having sold off in China and in Korea, and failed in the US. This creates massive opportunities. It is time for a big pivot to ramp up its investment in true green iron and steelmaking, not the coal-burning of the past.
Nippon Steel recently announced investment in iron ore mining in Canada that is of the quality needed for direct iron reduction, done without coal. Now it should use it spare billions to go all the way, and invest in renewable hydrogen-based direct reduction of iron. That could be done in Canada, in the US, or it could join the fast moving green iron train in Australia. The opportunities for green iron and green steelmaking are vast for a global company if it’s ready to embrace the future.
