US Senator calls for investigation into possible ties between Nippon Steel and China

Chairman of the US Senate Banking Committee Sherrod Brown has called on the White House to scrutinize the relationship between Nippon Steel and the Chinese steel industry, citing national security concerns amid congressional opposition to the U.S. Steel deal. It is reported by Reuters.

In his letter to the US President, Brown referred to an April report by Horizon Advisory, calling for a thorough investigation of the allegations made in the report and a review of Nippon’s ties to the Chinese government and the danger the merger poses to US national and economic security.

The Horizon report states that Nippon has a long history of supporting the development of China’s steel industry. It is also noted that the Japanese company fully or partially operates nine enterprises in this country, and also has active joint ventures with a number of Chinese steel leaders, which are supported by the state.

At the same time, Nippon Steel said in a statement that Horizon’s report is «rife with inaccuracies and distortions» and that its operations in China are «very limited» and account for less than 5% of the company’s global production capacity.

It is also noted that the companies in which Nippon Steel invests in China do not have control over its operations or business decisions outside the country. In addition, the Chinese partners do not have access to information about the company’s activities, including its research and engineering developments, outside of China.

At the same time, the United Steelworkers (USW) rejected a letter from Nippon Steel with commitments on costs and job protection, calling it a «meaningless piece of paper.» The union said it received it on March 27 along with a draft agreement.

In their response, USW President David McCall and Chairman of the Negotiating Committee Mike Millsap said that the union «will not support a deal in exchange for a package of empty promises.» They reiterated that they are focused on securing jobs and maintaining domestic ownership of US Steel.

In March, Nippon Steel announced that it intends to complete the acquisition of US Steel despite the fact that US President Joe Biden expressed his wish to keep the latter in American ownership. According to the Japanese company, the deal will bring obvious benefits to US. Steel, labor unions, the US steel industry in general, and US national security. In addition, the acquisition will strengthen American supply chains and economic protection from China.