A Cleveland-Cliffs plant in Conshohocken, Pa., in 2023.Matt Rourke/The Associated Press
Cleveland-Cliffs Inc. CLF-N chief executive Lourenco Goncalves says he is still interested in buying United States Steel Corp. X-N to create an American champion, as regulators continue to deliberate over whether to allow Japan’s Nippon Steel Corp. to buy the company.
Cleveland-based Cliffs, which recently acquired Canadian steelmaker Stelco Holdings Inc. STLC-T, attempted to buy its Pittsburgh-based competitor U.S. Steel in the summer of 2023. But Nippon Steel swooped in with a higher bid late last year that U.S. Steel’s board backed.
Amid a heated presidential campaign centred around gaining as many votes as possible in swing states such as Pennsylvania, U.S. President Joe Biden vowed to block the Nippon deal. So far, he has not followed through on his promise, but a review by the committee on foreign investment in the U.S. is scheduled to wrap up in late December, at which point Mr. Biden is expected to act.
Mr. Goncalves, who has been CEO of Cleveland-Cliffs since 2014, said in an interview that his hands are tied on making a move on U.S. Steel pending the outcome of the government review on the Nippon deal, but he’s ready to act if the transaction is indeed blocked.
“We can create an all-American solution to resolve the problem,” he said.
Mr. Goncalves was critical of what he called a “ridiculous” review process, which has dragged on for much of this year and is leaving workers at U.S. Steel in limbo.
“The Japanese created a campaign saying that they are going to invest. Guess what? Everybody will. You buy and you invest. If you don’t, the thing will go away,” he said.
“It’s not like the only solution is Nippon Steel. That’s totally absurd.”
The uncertainty over the fate of U.S. Steel hasn’t stopped Cleveland-Cliffs from going after other acquisition targets.
Cleveland-Cliffs in July announced a friendly arrangement to buy Canadian steelmaker Stelco for roughly $3.85-billion. Originally called the Steel Company of Canada, Stelco is the country’s biggest steelmaker, and was founded in 1910. The deal faced little pushback from Canadian regulators and closed a few weeks ago.
Mr. Goncalves said that the extended U.S. review around Nippon is what prompted him to make a move on Stelco, and in fact he wasn’t planning on buying it at all.
“Because U.S. Steel was like a patient that is in a coma – but nobody turns the machines off, so they’re still there lingering – I went ahead and bought Stelco and I’m very happy with that," he said.
With the recent election of Donald Trump as U.S. president, the Canadian steel industry is bracing itself for possible blowback. During his election campaign, Mr. Trump floated imposing a universal 10-per-cent tariff on all goods coming into the United States. In his first presidential term, Mr. Trump temporarily hiked tariffs on U.S. imports of Canadian steel, using them as leverage to win concessions in the 2020 United States-Mexico-Canada Agreement.
Since then, the Canadian steel industry has generally moved in lockstep with the United States. Canada recently imposed a 25-per-cent tariff on steel products coming from China to offset alleged dumping. Canada has also rolled out a “country of melt and pour” stipulation on imports. That allows authorities to monitor for steel from China entering Canada through a backdoor market, such as Mexico, potentially sidestepping the tariff.
Mr. Goncalves said he has spoken to several members of Mr. Trump’s incoming administration. While he says it’s clear that some countries will be hit with new tariffs, he doesn’t think that it would make sense for Mr. Trump to go after the Canadian steel sector, given how close the two countries are connected.
“Canada is the only country in the entire world that can claim it deserves a differentiated treatment,” he said.
“I’m here talking to you, sitting in my office, looking at Lake Erie. At the other side of Lake Erie is Canada. So, we are so similar, we are so close, we are so much alike that it’s good business and good government, in my opinion, to have the United States listening and working together with Canada.”