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Citing national security concerns amid bipartisan opposition in Congress to the Japanese company’s $14.9 billion deal to acquire US Steel Corp, the head of the US Senate Banking Committee on Tuesday urged the White House to scrutinise the relationship between Nippon Steel and the Chinese steel industry.
At least three US senators also have expressed concerns regarding Nippon Steel’s business engagements in China, initiating a fresh battleground in a political endeavour aimed at thwarting the Japanese conglomerate’s proposed $14.9 billion acquisition of US Steel.
Sherrod Brown, an Ohio Democrat who chairs the Senate banking committee, urged US President Joe Biden on Monday to launch an investigation into Nippon’s business connections in China, as per a letter obtained by the Financial Times.
Brown’s concerns stem from a report by Horizon Advisory, a consultancy, which highlighted that Nippon’s market exposure and operations in China pose a “significant national security risk.”
The Ohio senator emphasized the necessity for the Biden administration to meticulously scrutinize Nippon’s involvement in the Chinese steel industry, with which it has been intricately linked for over four decades.
Brown forwarded the Horizon report to Biden, garnering support from two other senators representing industrial states: Ohio Republican JD Vance and Pennsylvania Democrat Bob Casey, as reported by the FT.
Impact Shorts
More Shorts“As you examine this deal, I urge you to thoroughly investigate the allegations raised in this report and examine Nippon’s ties to the Chinese government and the danger this merger poses to American national and economic security,” Sherrod Brown said in a letter to Biden citing an April report, opens new tab by consultancy Horizon Advisory.
Nippon Steel said in a statement that Horizon’s report was “rife with inaccuracies and misrepresentations” and that its operations in China were “very limited”, representing less than 5% of its global production capacity.
The White House did not immediately comment. Horizon Advisory did not immediately respond to a request for comment.
Horizon’s report said Nippon had a long-run history of supporting the establishment of China’s steel industry and that it operated, in whole or in part, nine facilities in China and had active joint ventures with a range of Chinese state-backed steel champions.
“Nippon’s connection to the Chinese steel ecosystem and industrial policy agenda has concerning implications regarding ties to China’s military-civil fusion strategy and quest for global economic power,” said Brown, a Democrat from Ohio who is running for another term in the Nov. 5 elections.
Nippon Steel said the entities in which it invests in China have no control over its operations or business decisions outside of China, and that its Chinese partners do not have any access to information about Nippon Steel’s operations, including about its R&D and engineering, outside of China.
The White House sees steel as critical to national security, and Biden said last month that US Steel should remain domestically owned. His opponent in the Nov. 5 presidential election, former President Donald Trump, has promised to block the deal if he wins.
With inputs from agencies.