Cleveland-Cliffs CEO Says He's Still Interested in Acquiring US Steel, But No Bid is On The Table

SEATTLE (Scrap Monster):  It's tough to think of an issue that can unite Republicans and Democrats in Washington, including President Biden and Former President Trump, as well as the CEO of a Fortune 200 company and its union workers. But that’s what the proposed sale of US Steel to Japanese-owned Nippon has done.

It was Cleveland-based Cleveland-Cliffs, with the backing of the United Steel Workers union, that got this ball rolling last August when they announced their bid for US Steel. A bid was rejected by the U.S. Steel Board, which eventually accepted the Nippon offer.

"Four months ago it almost looked like a done deal,” said Sen. Sherrod Brown (D-OH) of the Nippon offer.

Brown, along with fellow Ohio Senator JD Vance, launched a bi-partisan effort to block the deal for a number of reasons, including national security concerns.

“We organized Senators in the Midwest, in the sort of steelmaking but also steel customer Midwest understood what this meant. The president of the United States has come out against it,” he said. I think the likelihood that this is going to be blocked is getting better all the time.”

“The president needs to block this deal. The potential sale of a major American steel company to Nippon Steel could jeopardize U.S. trade enforcement – enforcement that’s crucial to leveling the playing field for all Ohio steelworkers,” said Brown

On March 14, the White House issued a statement from President Biden that read, “It is important that we maintain strong American steel companies powered by American steel workers. I told our steel workers I have their backs, and I meant it. U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated.”

“I believe that the deal has been already called dead,” Cleveland-Cliffs President & CEO Lourenco Goncalves told News 5 Wednesday of the president’s stance. "He showed that an owner that's not an American company is not acceptable for the United States and I tend to pay attention when the President of the United States speaks.”

Nippon and U.S. Steel, though, disagree and are still moving forward with the planned purchase. Goncalves met Wednesday with Cleveland-Cliffs workers in Cleveland to bring them up to speed on the process.

Back in January, Goncalves announced Cleveland-Cliffs was moving on from US Steel, so I asked him if all of this means his offer is back on the table.

"No, my bid is not on the table,” Goncalves told News 5. “We'll see what's going to happen then we will evaluate from there. Of course I'm still interested in acquiring US Steel, it doesn't mean I have a bid on the table. They passed on opportunity to sell for more and to sell to a company that had the full support of the USW. Now they will have to handle the consequences of their decision."

Goncalves spoke of the initial offer while downplaying concerns raised that a sale to Cliffs would raise anti-trust concerns, giving the nation’s leading supplier of steel to the U.S. auto industry an even larger percentage of the market if they acquired U.S. Steel.

“It's a fair question,” he said. “Let's use the past to show what we're going to do in the future. When I acquired AK Steel, there was no concerns about anti-trust. When I acquired Arcelor-Mittal USA, lots of concerns about anti-trust, we didn't even get a second review. The anti-trust process is a very technically driven process; as long as you show what you're going to do, if you show that you are not going to exercise any pricing power, you're not going to do any harm to the economy, you clear the deal.

“So I had a plan going into the deal, and I demonstrated that to US Steel. They just elected to ignore it because it was not about not allowing Cleveland Cliffs to buy the company; it was about breaking the back of the USW,” he said. “So anti-trust is just an excuse.”

Cliffs entered the deal last August after acquiring the USW’s bid rights that gave the union a say in any US Steel sale. Those rights, the union argues, have been ignored.

“And that's the problem they haven't recognized the bid rights and a matter of fact they've kept us in the dark through the whole process,” said Donnie Blatt, the USW’s District 1 Director. “They're actually in violation of our collective bargaining agreement that we have now with U.S. Steel. So what's that say for us going forward with Nippon? Trying to get a collective bargaining agreement with them as well.”

Cleveland Cliffs acquired the Cleveland Works plant from Arcelor-Mittal in 2020, it was owned by Republic before that. While the workers Goncalves was meeting with Wednesday are not directly impacted by a US Steel deal, their fellow USW members are and they appreciate the open dialogue with their CEO about it.

"We never had that before,” said Dickie Peskar, President of USW Local 979. “He's a real down-to-earth guy compared to most CEOs I've ever seen, but I've never seen many other of them because they don't come around. He tells it like it is and we appreciate that."

 Courtesy: www.news5cleveland.com