Nippon Steel Corporation (NSC) has announced that it will acquire United States Steel in an all-cash transaction valued at $55 per share, representing a total enterprise value of $14.9 billion. The acquisition will reportedly work to meet growing global demand for high-grade steel while driving the industry toward decarbonization.
NSC said that the deal will help it significantly expand production in the U.S. and will add to its current primary production regions of Japan, India, and the Association of Southeast Asian countries. The Japanese company aims to increase production capacity to 86 million tons of crude steel, marking progress towards its goal of reaching 100 million tons each year. The NSC and U.S. Steel will reportedly implement their shared production technologies and know-how through the acquisition, including cost-effective operations, energy savings, and recycling.
Both companies maintain a commitment to decarbonize by 2050 and will continue to implement alternative technologies to conventional, carbon-intensive steel production methods. NSC said it is developing three such technologies, including hydrogen injection into blast furnaces, use of electric arc furnaces, and use of hydrogen for the direct iron reduction process. U.S. Steel also strives to reduce energy use in current operations and has begun integrating electric arc furnaces as well.
“U. S. Steel and NSC create a truly global steel company with combined capabilities and innovation capable of meeting our customers’ evolving needs,” said David Burritt, president and CEO of U.S. Steel. “Today’s announcement also benefits the United States -- ensuring a competitive, domestic steel industry, while strengthening our presence globally. Our shared decarbonization focus is expected to enhance and accelerate our ability to provide customers with innovative steel solutions to meet sustainability goals.”
The steel industry is known as a hard-to-abate sector, but it is also key for the development of many renewable energy technologies, including the infrastructure needed for solar and wind power. At present, it accounts for about 8% of global emissions, mostly from the burning of coal.
Because of the industry’s importance in the clean energy transition, decarbonizing steel operations is expected to completely transform the steel supply chain. According to a recent report from Wood Mackenzie, this will take place largely with the increased use of electric arc furnaces, which are emissions-free when running on electricity from renewable sources.
Multiple parties are reportedly disappointed that U.S. Steel is to be acquired by a foreign company, especially as efforts have been made to support domestic supply chains for clean energy development. In acquiring U.S. Steel, NSC is also expected to benefit from grants and tax credits included in the Inflation Reduction Act as the company works to decarbonize operations in the U.S.
