
When it comes to the U.S. Steel/Nippon merger, it’s all over but the crying. And there will be quite a lot of expensive crying in federal courtrooms over coming months and years. But that doesn’t mean the story is over. We’re going to learn a lot. This is the start of something, not the end.
President Biden’s decision to block the Japanese steelmaker Nippon’s purchase of U.S. Steel wasn’t surprising, per se. He said he would, and President-elect Trump vowed to do the same.
It does, however, creak open a spooky haunted vault of economic uncertainty for iron and steel communities across the country. It also leaves more than 1,800 U.S. Steel employees on the Iron Range wondering exactly what comes next.
All that depends on who’s right, who’s telling the truth, and who’s got leverage. We’ll figure that out soon enough, but there are several potential scenarios.
Let’s start with an optimistic viewpoint. The United Steelworkers of America expended tremendous effort to stop the Nippon deal on the belief that it was a bad deal for U.S. Steelworkers and that a better deal would come later. They’ve declared Cleveland-Cliffs to be their preferred buyer. Most would agree that the idea of an American owner would be better than a foreign one.
For his part, Cliffs CEO Lourenco Goncalves vowed to maintain good relations with the union, to invest in aging blast furnaces, and to continue developing facilities that produce “green” (reduced carbon) steel products. So, let’s say all that happens and few if any workers lose their jobs in the process. We’d all say that sounds pretty good.
I’m on the record as being skeptical about this rosy scenario, however. I expect it would play out more like the following. All of that same stuff, but fewer mining facilities extracting from the same ore bodies with fewer workers. At first, the pain would be minimized by attrition and the influx of some investment dollars, but over time we’ll notice a smaller iron mining industry on the Range. Perhaps that’s unavoidable, but it’s certainly not what the union expects in exchange for its support of Cliffs.
But we also can’t rule out that this could go sideways in ways we can’t predict. On Monday, Nippon Steel and U.S. Steel sued the federal government, the United Steelworkers and Cleveland-Cliffs. The lawsuit against the government suggests false pretenses for shutting down the deal on national security grounds.
Japan is an ally of the United States, stands in opposition to China, and already invests heavily in the U.S. economy. Japan’s prime minister, Shigeru Ishiba, expressed concern about the way this went down. The loss of future Japanese investment in the steel industry could hurt the U.S. later.
In addition, Cliffs faces a lawsuit alleging interference in the deal. The suit cites many interviews given by Goncalves that affected stock prices and public opinion about the deal. This reminds of another unresolved lawsuit against Cliffs by Mesabi Metallics over its proposed project near Nashwauk. The union may want Cliffs to prevail, but if the company is dinged for trade violations in these cases, Cliffs will struggle.
Another worry is that a downturn in the U.S. economy could drag the steel industry through hell while the U.S. Steel situation remains unresolved. Companies must prepare for these events like bears fattening up for the cold season. An exposed, vulnerable U.S. Steel might not make it through the winter, figuratively speaking.
Two other immediate problems are the level of distrust between the union and company, and the hard-edged rivalry between U.S. Steel and Cliffs. These don’t appear to be easily resolved. Contract negotiations are coming up next year. Meantime, Hibbing Taconite, co-owned by these warring companies, needs ore. The most obvious supply is controlled by U.S. Steel. Thus, shutdowns, work stoppages and long term uncertainty seem more likely than ever.
The worst problem of all — the one that keeps me up — is that investment in value-added iron and steel production remains stalled. Neither U.S. Steel (or its successor), nor Cliffs, are going to make any major investments until these matters are resolved. The speed of new development around the world in green steel and more efficient furnaces could leave the United States in the dust. China already produces six times more steel than the rest of the world combined.
The U.S. can’t compete on quantity, only on quality. And fights like this high stakes dustup over U.S. Steel promote no quality at all.
Aaron J. Brown is an author and college instructor from northern Minnesota’s Iron Range. He writes the blog MinnesotaBrown.com and co-hosts the podcast “Power in the Wilderness” on Northern Community Radio. This piece first appeared in the Saturday, Jan. 11, 2025 edition of the Mesabi Tribune.
I guess Nippon Steel suing the Steelworkerd union says it all regarding the purchase being a better deal for steelworkers. If they would of come in supporting the union maybe things woiuld be diffferent. If rthe deal had gone though without that option in the end the worker could have been no better off then working for Elon Musk, and we all know how he treats his workers.