Sep. 04, 2024

Nippon Steel Corporation

September 4, 2024 – TOKYO, Japan – Nippon Steel Corporation (“Nippon Steel”) (TSE: 5401) announced today its governance policy for United States Steel Corporation (“U. S. Steel”) (NYSE: X) following the close of its pending acquisition (“Transaction”).

Nippon Steel continues to believe that the Transaction will enhance American national security by reinforcing U. S. Steel and its domestic production capabilities, bringing cutting-edge technologies into the United States, and ultimately making the American industrial base and supply-chain more resilient and better positioned to compete against future pressures from state-supported Chinese competitors.

The governance policy announced today has been developed to ensure the benefits of the Transaction, while also maintaining U.S. Steel as an iconic American company.

The details of the announced policy are as follows (underlined items are newly announced today):

Structure, Domestic Ownership and Headquarters
1. U. S. Steel to remain a U.S. company owned by Nippon Steel North America, Inc. (“NSNA”), a New York corporation that has operated in the United States for over 50 years and indirectly owns multiple U.S. facilities that employ over 2,500 employees, approximately 620 of whom are represented by the USW. NSNA is a subsidiary of Nippon Steel Corporation.

2. U. S. Steel, under NSNA, will remain headquartered in Pittsburgh, Pennsylvania, with the following operating structure:
  a. U.S. citizens will make up the majority of the Board of Directors of U. S. Steel.
  b. U. S. Steel’s Board of Directors will include three independent directors who are U.S. citizens.
  c. Core senior management members of U. S. Steel will be U.S. citizens.

U.S. Domestic Production
1. Nippon Steel will prioritize production at U. S. Steel to meet the demand in the U.S. steel market.  
2. As previously announced, Nippon Steel commits to the following items (a) to (d) to enhance U. S. Steel’s domestic production capabilities:
  a. Substantial investments in the existing production facilities of U. S. Steel:
    i. At least $1.4 billion investment in USW-represented facilities, above and beyond what is required under the basic labor agreement between the USW and U. S. Steel.
    ii. At least $1 billion to enhance the competitiveness of the Mon Valley Works, including improving yield, increasing energy efficiency, improving product quality, and enhancing overall operating effectiveness. The commitment will include replacing and/or upgrading the hot strip mill and other facilities at Mon Valley Works. 
   iii. Revamping blast furnace #14 at Gary Works, which is anticipated to require an approximate $300 million investment.
  b. No transfer of any of U. S. Steel’s production capacity or jobs outside the United States.
  c. No layoffs or plant closures or idling of U. S. Steel facilities as a result of the Transaction (subject to certain exceptions agreed upon with the USW).
  d. Transfer of Nippon Steel’s enhanced manufacturing and technology capabilities to U. S. Steel on arm’s length terms, including as it relates to reducing carbon emissions from blast furnace steelmaking, where such transfers are economically and technically feasible.

Trade
1. No interference by Nippon Steel/NSNA with U. S. Steel’s decisions on trade matters and its determination to pursue trade measures under U.S. law against unfair trade such as antidumping/countervailing duty orders or safeguard measures, including with respect to countries in which Nippon Steel has operations.
2. U. S. Steel will maintain an internal officer-level “trade committee” comprised of U.S. citizens, which will make recommendations to the U. S. Steel Board of Directors on trade matters and document the decision-making process.
3. Decisions on trade matters will require approval by a majority of the independent, U.S. citizen members of the Board of Directors to ensure that such decisions are made without interference by Nippon Steel/NSNA, and to document the decision-making process for U. S. Steel.

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Nippon Steel is confident that the Transaction will revitalize the American steel rust belt, benefit American workers, local communities, and national security in a way no other alternative can. Simply put, U. S. Steel and the entire American steel industry will be on much stronger footing because of Nippon Steel's investment in U. S. Steel – an investment that Nippon Steel is the only willing and able party to make.

Nippon Steel believes that a fair and objective regulatory review process will support this outcome, and looks forward to closing the transaction as soon as possible.

For inquiries
https://www.nipponsteel.com/en/contact/

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