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The US government has extended its national security review of Nippon Steel’s proposed $15bn acquisition of US Steel, in a surprise move given that the deal had been opposed by Joe Biden and Kamala Harris.
The Committee on Foreign Investment in the US, the government panel that vets inward investment for security risks, granted the Japanese group a 90-day extension, said two people familiar with the situation.
The decision means the deal’s fate will almost certainly not be decided until after the US election on November 5.
The extension is a new twist in an almost year-long saga that has become entwined in the White House race, with both Harris and Republican candidate Donald Trump opposing the Japanese group’s takeover as they court votes in Pennsylvania, where US Steel is headquartered.
President Biden had already privately signalled he would block the deal, which is also opposed the United Steelworkers Union.
Cfius, an intra-agency panel led by Treasury, had completed a review and concluded that the deal posed security risks that could not be mitigated. The panel had not formally transmitted the recommendation to Biden.
The decision comes days before Biden is due to meet Japan’s Prime Minister Fumio Kishida when he hosts the leaders of the Quad security grouping — the US, Japan, Australia and India — in Delaware over the weekend.
The Financial Times reported last week that Takahiro Mori, vice-chair of Nippon Steel and the lead negotiator for the transaction, had flown to Washington in a last-ditch attempt to salvage the deal.
Nippon Steel declined to comment on the extension. US Steel did not respond to request for comment.
The USW president David McCall said: “President Biden and vice-president Harris both stated unequivocally that they believe US Steel should remain domestically owned and operated and have maintained firm support for USW members and their jobs.”
He added: “Ultimately, nothing has changed regarding the risks that Nippon’s acquisition would pose to national security or the critical supply chain concerns that have already been identified.”
One of the people familiar with the extension decision said Cfius had laid out serious national security concerns and the companies had requested more time to try to address those issues.
The person said it was not uncommon for companies to refile petitions for approval in complex cases and added Cfius would likely take close to the full 90 days to finish the review.
The second person familiar with the situation said the decision to extend the security review was taken because there were too many things going on at the same time that were “overwhelming” the system in the US.
He said the US was negotiating with Japan to create export controls to contain China’s chip industry. Both countries are also in the middle of political seasons. The US election is in seven weeks and the ruling Liberal Democratic party in Japan will soon hold its leadership contest which will usher in a new prime minister.
Biden expressed his opposition to the deal earlier this year, taking a protectionist stance widely seen as a political move to get union votes in Pennsylvania, a crucial swing state that could decide the US presidential vote.
Harris echoed Biden’s stance after the vice-president replaced him as the Democratic presidential candidate. Trump said in 2023 he would block the deal if he won back the White House.
Cfius’s decision to extend the review — which had already been completed once — by 90 days means the final decision on the acquisition will fall to the next president.
In an attempt to push back against the opposition in Washington, US Steel recently said thousands of jobs were at risk if the deal fell through.
The extension was first reported by Bloomberg News.
Additional reporting by Taylor Nicole Rogers in Philadelphia.
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