South Africa Looks to Attract Chinese Firms to Its $27-Billion EV Industry

By Charles Kennedy - Jan 03, 2025



South Africa’s recently adopted tax breaks for electric vehicle production have already piqued the interest of three Chinese EV manufacturers to invest in new-energy vehicles in the African country, an official at the local automotive association told Bloomberg.

Three car makers from China have already signed non-disclosure agreements with the South African Automotive Business Council, its CEO Mikel Mabasa told the newswire in an interview published on Friday.

Mabasa did not elaborate on which these automakers are.

South Africa now has as much as a 150% tax deduction on investment in electric- and hydrogen-powered vehicle production.

Chinese EVs are already competing with the South African manufacturing bases of global giants such as Toyota and Volkswagen AG.

Despite the plans for the massive tax breaks – months in the works – no Western manufacturer has announced yet new investments in EVs or other zero-emission vehicles.

Earlier this year, Volkswagen and Isuzu Motors said they do not have immediate plans to make electric or hybrid vehicles in South Africa despite generous tax breaks in the country.

South Africa has said that companies that invest in the production of electric vehicles (EVs) in the country would be able to claim a 150% tax deduction on these investments, beginning in 2026. The country aims to attract EV manufacturing and incentivize its EV and hydrogen industries, which are relatively small and underdeveloped.

However, Volkswagen and Isuzu plan to remain focused on vehicles with internal combustion engines in South Africa, the respective regional heads of the two auto manufacturers told Bloomberg.

Stellantis, however, is weighing the possibility of expanding its South African production into the new-energy vehicles (NEVs), as EVs, plug-in hybrids, and traditional hybrids are known.

Stellantis’s decision would depend on whether a market for these vehicles emerges in South Africa, the managing director of the company’s South African unit, Mike Whitfield, told Bloomberg in an interview in June.

By Charles Kennedy for Oilprice.com

The Global Electricity Price Divide: Who Pays the Most?

By Haley Zaremba - Jan 05, 2025, 12:00 PM CST

Electricity prices vary significantly across the globe, with countries like Denmark and Ireland facing some of the highest costs while oil-rich nations like Iran and Qatar enjoy some of the lowest.

Factors influencing electricity prices include the cost of fuel, infrastructure costs, weather, energy consumption, and government policies.

The United States faces a complex energy landscape with rising demand due to factors like AI and climate change, while the potential for increased LNG exports could further impact domestic energy prices.



Electricity prices were a popular topic in global headlines in 2024. President-elect Donald Trump ran a campaign based on promises to slash energy prices for United States consumers. Ukraine is facing a brutal winter with punishing electricity costs on top of its already stressed and war-stricken economy. Europe is facing ever-higher rates of energy poverty and is desperately seeking solutions. But while problems surrounding energy prices are widespread, they are not exactly global.

Around the world, people are paying vastly different prices for their energy. Prices can vary wildly between and even within countries. The four primary factors impacting your utility bill are the cost of the fuel itself, the cost of services associated with bringing that energy to your home, the weather – which impacts those services as well as the availability of variable energy sources such as solar and wind power, and, of course, the amount of energy you consume. Each of these factors is heavily influenced by where in the world you are located. These four basic factors are each heavily dependent on other local and regional conditions such as infrastructure, geography, domestic energy resources, energy policy, and taxes and levies.

Some of the highest energy prices in the world can be found in countries that charge their own residents residential end-user electricity prices, including Denmark, Belgium, and Sweden. Meanwhile, other countries, especially energy-rich ones, subsidize their electricity so significantly that energy is virtually free for those who live there.

So who is paying the most and who is paying the least to keep the lights on around the world?




In 2024, Italy, Ireland, and Denmark had some of the highest household electricity prices in the world. As of March of this year, “Italian households were charged around 0.43 U.S. dollars per kilowatt-hour, while in Ireland, the price stood at 0.41 U.S. dollars per kilowatt-hour,” Statista reports. “By comparison, in the United States, residents paid almost three times less.”

On the other end of the scale, perhaps unsurprisingly, some of the biggest oil-producing countries in the world make up the nations with the lowest overall energy prices in 2024. These include Iran, Qatar, and Russia. In those locations, the average household pays less than 0.1 U.S. dollars per kilowatt-hour.

Germany and Italy, which were among the countries paying the most for energy this year, were also the two top importers of natural gas in Europe in 2023. That’s no coincidence. Net exporters of fossil fuels are able to maintain stable and low energy prices for their own domestic markets, whereas net importers are highly vulnerable to shocks and volatility in oil markets.

Energy prices in the United States are relatively reasonable, ranking toward the middle of the spread. However, even these comparatively affordable prices are proving to be punishing for U.S. households. The landscape of energy poverty in the United States is changing rapidly thanks to policy, industrial, and climate concerns. And energy prices over the next few years are shaping up to be a wild ride, as Trump promises to slash prices but also promises to boost United States liquified natural gas imports, which experts agree will drive up prices.

A recent Department of Energy report found that increasing natural gas exports “exposes a triple-cost increase to U.S. consumers,” in the words of Secretary of Energy Jennifer Granholm. Moreover, energy demand rates are rapidly changing in the United States due to skyrocketing consumption from data centers driven by the expansion of artificial intelligence, as well as a warming climate pushing residents in the South and Southwest to crank their air conditioners to new heights.

Of course, the issue of AI and the climate are not isolated to the United States, and we can expect to see the average electricity prices fluctuate in many countries and regions in the coming years.

By Haley Zaremba for Oilprice.com

Germany's Solar Industry Faces Cloudy Future As Demand Slows

By Tsvetana Paraskova - Jan 05, 2025

The German solar industry is experiencing a significant downturn due to decreased demand for residential solar installations, driven by falling energy prices and rising interest rates.

German solar companies are also facing intense competition from Chinese manufacturers offering lower-priced products, leading to financial difficulties and job losses.

The decline in the solar market threatens Germany's renewable energy goals and highlights the challenges faced by the solar industry in maintaining growth and competitiveness.


Germany’s solar boom has slowed to a trickle and turned into a bust for domestic manufacturers of solar panels and PV system installers and providers.

Following a breakneck surge in solar power installations in 2022 and 2023 at the peak of the energy crisis, German solar capacity additions slowed toward the end of 2024, with residential installations bearing the brunt of the decline in demand.

Households were more eager to have rooftop or ‘balcony solar’ installed in 2022 and 2023, when power prices in Germany spiked during peak energy crisis, than they were in 2024.

Moderating energy prices as the crisis eased coupled with high interest rates for consumers. For some of them, higher upfront costs at higher interest rates and falling power prices compared with the 2022-2023 highs could not justify investment in residential solar systems.


As demand declined, German solar power firms began to struggle with lower revenues and earnings. Domestic companies also faced increased competition from Chinese manufacturers, which offered lower-priced products.

As a result, the German industry sank further into the red as their attempt to compete on prices meant that their sales prices were below production costs.

This situation has created hardships for Germany’s solar companies, pushing some of them into insolvency and forcing many others to slash jobs and seek business restructuring to adapt to the glut of offerings and low sales prices.

Between January and September 2024, solar remained the key contributor to Germany’s renewables growth, energy think-tank Ember said in a November analysis. From January to September, wind and solar combined exceeded fossil power generation in Germany for the first time ever, reaching a record 45% share, according to Ember’s data.

However, the pace of solar growth slowed. In 2023, Germany’s new capacity additions doubled compared to 2022, but growth slowed to 3% for the first nine months of 2024 compared to the same period of 2023.

In the latter half of 2024, solar installations – especially residential solar – declined and left many German manufacturers and installation providers scrambling for a future.

Photovoltaic (PV) systems provider ESS Kempfle filed for insolvency in October.

PV project developer Fellensiek filed for insolvency a month earlier, due to liquidity problems.

Solarmax, a provider of residential PV storage systems and inverters, also went under provisional insolvency administration in November. Solarmax could not withstand the plunge in prices as a result of Chinese manufacturers’ low prices.

Other German companies laid off employees amid a collapse in residential solar demand, business daily Handelsblatt reported in September.

Berlin-based start-up Zolar was forced to cut more than half of the jobs.

The years 2022 and 2023 saw a boom in the solar industry, but 2024 would be “pretty tough,” Zolar’s boss Jamie Heywood told Handelsblatt in September.

German inverter manufacturer SMA Solar Technology announced in November job cuts that would affect up to 1,100 full-time positions worldwide by the end of 2025, about two-thirds of which would be in Germany. SMA Solar cited a “very challenging” market for the home and Commercial & Industrial (C&I) segments.

“The solar industry is going through a transformation,” said SMA’s chief financial officer, Barbara Gregor.

The case for residential solar investments has been undermined in recent months by declining subsidies and rising investment costs, economists and researchers at the Wiesbaden Business School, Hochschule RheinMain, wrote in a scientific article at the end of last year.

“In addition, electricity price uncertainty has risen sharply, making the economic benefit of using self-produced electricity from residential photovoltaic systems risky,” the authors, led by Carlo Kraemer, wrote in the study.

The decline in the residential solar market is not unique to Germany—the EU market overall saw a drop in these installations last year, industry group SolarPower Europe said last month.

Across the EU, demand for residential rooftop solar fell in 2024 as the impact of the energy crisis faded, SolarPower Europe said. New home solar installations declined by almost 5 gigawatts (GW) compared to 2023, with 12.8 GW installed, SolarPower Europe found in its annual report.

“European policymakers and system operators can consider this year’s report a yellow card,” said Walburga Hemetsberger, CEO at SolarPower Europe.

“Slowing solar deployment means slowing the continent’s goals on energy security, competitiveness and climate.”

By Tsvetana Paraskova for Oilprice.com

Biden Makes a Big Bet on Clean Hydrogen With New Tax Credits

By Julianne Geiger - Jan 03, 2025

The US Treasury Department finalized rules for a $3/kg clean hydrogen tax credit, aiming to boost domestic production.

The new rules expand eligibility beyond renewable energy to include nuclear power, natural gas with carbon capture, and even methane from waste sources.

This policy aims to accelerate clean hydrogen development in the US but sparks debate over the inclusion of fossil fuel-derived hydrogen sources.


In the high-stakes race to dominate the clean hydrogen market, the Biden administration just handed out a golden ticket—or rather, loosened the strings on who can cash in. New rules for a tax credit worth up to $3 per kilogram of hydrogen are a boon for companies eager to turn this clean-burning fuel into big business. After months of lobbying and a draft that left many industry players fuming, the Treasury Department has delivered a rulebook that’s friendlier to hydrogen hopefuls.

The revisions don’t just extend the timeline for renewable energy integration. They also expand eligibility to include nuclear power, natural gas with carbon capture, and even methane from sources like wastewater and manure, meaning your trash is now potentially treasure. Nuclear plants, previously a bit of an afterthought in clean energy debates, can now be counted as a clean energy source—a win for companies like Constellation Energy, whose shares ticked up 2.6% on the news.

Hydrogen is hailed as the fuel of the future, crucial for cleaning up industries like steel and cement production, not to mention heavy transport. But the devil has been in the details. Critics have pointed out that the U.S. hydrogen plan, including its $7 billion for regional hydrogen hubs, risks becoming a subsidy buffet for Big Oil. Skeptics argue that expanding eligibility to fossil fuel-derived hydrogen, even with carbon capture, feels like putting a green bow on a dirty package.

Still, for project developers, this clarity is what they need to move forward. “The extensive revisions…make the United States a global leader in truly green hydrogen,” said senior climate adviser John Podesta. Whether this will create the hydrogen utopia that advocates envision or just another battleground in the clean energy debate remains to be seen. But one thing’s certain: the hydrogen gold rush is on, and everyone’s suiting up.


By Julianne Geiger for Oilprice.com

Will Trump Actually Levy Tariffs on Canadian Oil?

By David Messler - Jan 02, 2025,

The likelihood of tariffs being applied to Canadian oil imports is low due to Canada being the largest supplier of heavy crude to the US.

Tariffs would likely increase domestic oil production and prices, but may not directly lead to inflation.

Suncor Energy presents a potential investment opportunity due to its low multiples, growing production, and aggressive cost reduction program.



The stocks of Canadian heavy oil producers have just taken a shellacking over the last six months. Much of the downdraft has coincided fairly well with the results of the American presidential election in early November, sending Donald Trump back to the White House. Trump has promised to levy a 25% tariff on Canadian imports if that country doesn’t improve its border security measures. The smart money recognizes this as being mostly bluster on his part, but it has put the Canadian government into a full-stop panic-as it was intended to do.



Since the election a non-stop parade of Canadian officials-Justin Trudeau and a couple of his key ministers have made the 1,200 mile trek southward from Ottawa to Mar a Lago to dine with the incoming American president and meet with his advisors. In the intervening time Canada has announced a new series of regulations meant to address President-Elect Trump’s concerns.

There is no indication from the Trump camp as yet if these measures will be sufficient to allay the northern border concerns, but I think the likelihood of tariffs being applied to Canadian oil imports is fairly remote. Canada is our largest supplier of the heavy crude that is mixed with lighter shale oil in our Gulf Coast refineries. In fact as documented by the EIA-WPSR it is our largest source of imported oil, period. There would be significant knock-on effects to tariffs on oil, but it might not be what you expect.





The initial reaction is that consumers will see the price increases and that will lead to inflation. That can happen, but it's an over-simplified application of this economic tool. For reference we had higher prices circa mid 2010's $80-90 per bbl, and inflation in the 1-2% level, so there is no direct link between the two. I am firmly in the camp that the inflation we experienced a couple of years ago is much more closely aligned with the increase in money supply from the Covid era and the related logistics and supply chain kinks that had more money chasing fewer goods. The structurally higher price regime we now live with is just waiting on a recession to restart price competition at the retail level. Your guess is as good as mine as to when this will happen.

This is not to say that consumers wouldn’t see higher gasoline and other energy related prices. Let me explain. Producer psychology in commodities is to seek the highest price they can get for their product. Tariffs set a floor price for a good in practice. Domestic producers rightly figure, if the market clearing price for oil is 25% higher than the NYMEX...hey they want that price too and it becomes the market price. This has the effect of restricting imports and increasing domestic production-and profitability. Don't believe me? Here is a scholarly take on what I've just described.

“When a tariff or other price-increasing policy is put in place, the effect is to increase prices and limit the volume of imports. In the figure below, price increases from the non-tariff P* to P'. Because the price has increased, more domestic companies are willing to produce the good, so Qd moves right. This also shifts Qw left. The overall effect is a reduction in imports, increased domestic production, and higher consumer prices.”



Accordingly, I do not expect that tariffs will go into effect on Canada for this reason coupled with the fact that the country seem to be making a ‘good-faith’ effect to come into compliance with Trump’s demands.

If all of what we have discussed to this point is true, then the sell-off in the Canadian Oil Sands miners is not justified based on a fear of tariffs. Here is a recommendation that investors might want to consider to take advantage of this temporary dislocation in prices of one company in particular.

Suncor Energy

Suncor Energy, (NYSE:SU) had rallied into the middle $40’s on the strength of low multiples, growing production and an aggressive cost reduction program that has knocked $10.00 of cost in the last year. Demand in Canada has also received a 600K BOPD boost from the start-up of the Transmountain Express-TMX, pipeline west into British Columbia for export. This has also had the effect of narrowing the WCS discount to WTI. All music to stock analyst’s ears.

SU has recently reached a net debt target of $8 bn CAD, triggering enhanced shareholder capital returns. Aided by a recently reduced capex plan for 2025, this return of capital could become increasingly attractive to investors seeking future income. The stock is currently trading in the middle $30’s USD, and pays a recently raised dividend of $1.58 USD annually. Also in Q-3, 2024 the company repurchased 42 mm of its common shares or 3.2% of its outstanding float in an NCIB authorization that ends in February, 2025.

Key risks to the investment thesis for SU are primarily fuel related. SU uses natural gas to fire boilers to produce steam for injection into the heavy oil reservoirs from which its low (teens) API gravity oil is produced.

SU’s base plant mine is likely to see end of life-ARO, costs from inventory depletion in about 10-years, but this may be alleviated by the Firebag development, which has already seen record production in its first five months of operation.

Finally, if tariffs were to be placed on Canadian oil imports SU’s revenues could suffer as refiners turn to other sources for heavy blending crude.

Commodity analyst firm Goldman Sachs is bullish on the oil sector for 2025, which was noted in a recent Yahoo Finance piece. Suncor was picked as their number two idea in the upstream sector, noting that it had a 58% upside to current prices in the next year.

All in all, I think SU rates as a top idea going into 2025 and the current price represents an excellent entry point for capital growth and well-funded capital returns.

By David Messler for Oilprice.com

Cameco suspends uranium production at Inkai JV in Kazakhstan over bureaucratic holdup

Blair McBride - The Northern Miner | January 2, 2025 

State-run Kazatomprom operates 26 deposits grouped into 14 asset clusters, all of which are located in Kazakhstan. (Image courtesy of Kazatomprom.)

Cameco’s (TSX: CCO; NYSE: CCJ) Inkai joint venture project in Kazakhstan has suspended uranium production because of a bureaucratic holdup, the Canadian producer said Thursday.


The in-situ recovery JV, in which Cameco holds a 40% stake and state-owned Kazatomprom (LSE: KAP) holds 60%, didn’t get an extension to submit its project paperwork because of a delayed submission to Kazakhstan’s energy ministry.

The extension was expected to come through last year, and as recently as Dec. 26 reports hadn’t indicated that production might be suspended, Cameco said in a release.

The Saskatoon-based company’s shares gained 1.8% to C$75.28 apiece on Thursday morning in Toronto, for a market capitalization of C$32.7 billion ($2.2 billion). Its shares traded in a 52-week range of C$48.71 to C$88.18.

Shares in Kazatomprom fell 2.1% to $36.95 apiece in London, giving it a market cap of £7.8 million ($9.6 million).
Production increase questions

The Inkai suspension adds more uncertainty to Kazakhstan’s near-term uranium production ramp up, BMO Capital Markets analyst Alexander Pearce wrote in a note on Thursday.

Kazatomprom’s announcement suggests the paperwork approvals should be resolved shortly, Pearce said. Meantime the spot uranium price could rise if Cameco and Kazatomprom have to purchase supplies to meet sales commitments, he said.

“The company highlighted that documentation is expected to be submitted in the next couple of weeks, but it is not clear on a timeline for the approvals process and commencement of operations,” Pearce said.

Still, Kazatomprom doesn’t expect any significant impact on its production forecast this year of 65-68.9 million tonnes of uranium oxide (U3O8), Pearce said. BMO puts the same forecast at 65.6 million tonnes of U3O8.

As the largest uranium operation in the Central Asian country, Inkai’s output should total 9.3 million lb. this year, representing 14% of Kazakhstan’s production and 16% for Cameco, BMO forecasts.

Raymond James analyst Brian MacArthur wrote that the timing of Cameco’s roughly 4 million lb. of U3O8 annual output from Inkai can vary since shipments use the TransCaspian International Transport Route, outside of Russian rail lines and ports.

“The timing of these deliveries, in turn, can impact the timing/amount of dividends (Cameco) receives from JV Inkai,” he said.

The uranium spot price was at $73 per lb. as of Dec. 31, down 5.8% from $77.13 at the end of November, and down 27.5% from the energy metal’s 17-year high of $100.25 one year ago, according to Trading Economics.

ECOCIDE

Sandfire America wins water rights ruling in Montana

Staff Writer | January 3, 2025 | 

Site of Black Butte project in Montana. Credit: Sandfire Resources America

Sandfire Resources America (TSXV: SFR) has received another positive court ruling in Montana, this time regarding its leasing of mitigation water rights for the Black Butte copper project, which has been challenged by local communities for years.


In March 2020, Sandfire subsidiary Tintina Montana received preliminary approval from the Montana Department of Natural Resources and Conservation (MT DNRC) for the issuance of a beneficial groundwater permit, but was subsequently challenged by five environmental organizations.

A district court judge upheld the MT DNRC’s decision in 2023 when the environmental groups lost their challenge at a MT DNRC hearing and petitioned for Judicial Review, ruling that both the DNRC and the hearing examiner had properly determined that “mine dewatering is not a beneficial use of water.”

On Friday, Sandfire announced the Montana Supreme Court has affirmed the district court ruling on its determination of “beneficial use of water” with a 5-2 decision.

This decision follows the February 2024 Supreme Court ruling that reinstated the company’s operating permit after it was invalidated by the District Court in April 2022 following a lawsuit by local conservation groups against Tintina Montana and the Montana Department of Environmental Quality (MT DEQ).

Sandfire CEO Lincoln Greenidge said the Black Butte copper project now has all permits to proceed, as it had reached the feasibility stage in 2020. At the time, Sandfire’s management called it “one of the few fully permitted and development-ready copper assets globally.”

The feasibility study was based on mining from the Johnny Lee deposit, which underpins an 8-year mine life and is designed to be mined at 1.2 million tonnes of ore per annum. Average annual production is estimated at approximately 23,000 tonnes of copper at a cash cost of $1.51/lb.

Shares of Sandfire America surged 38.3% to C$0.42 apiece by 12:15 p.m. ET, near its 52-week high of C$0.46. The company has a market capitalization of C$424.7 million ($294m).

Biden officials issue permit for Perpetua’s Idaho antimony-gold mine

Reuters | January 3, 2025 | 

Yellow Pine pit at the Stibnite Gold project in Idaho. Image: Amanda Stutt.

The Biden administration on Friday issued the final mining permit for Perpetua Resources’ Idaho antimony and gold project, a move aimed at spurring US production of a critical mineral at the center of a widening trade war between Washington and Beijing.


Permitting for the mine, backed by billionaire investor John Paulson, comes after Beijing last month blocked exports to the US of antimony, a metal used to make weapons, solar panels, flame retardants and other goods for which there are no current American sources.

The US Forest Service released the final record of decision for Perpetua’s Stibnite project – essentially the mine’s permit – after an eight-year review process, according to documents published on the agency’s website.

Shares of Boise, Idaho-based Perpetua gained 9.1% in after-hours trading after Reuters reported the permit decision earlier on Friday.

Perpetua’s mine will supply more than 35% of America’s annual antimony needs once it opens by 2028 and produce 450,000 ounces of gold each year, a dual revenue stream expected to keep the project financially afloat regardless of any steps Beijing may take to sway markets.

For example, Jervois Global, the owner of an Idaho mine that produces only cobalt, declared bankruptcy on Thursday after Chinese miners aggressively boosted production of that metal in a bid for market share.

In its 154-page report, opens new tab, the Forest Service said its Perpetua decision was based on a detailed review of environmental data, discussions with Indigenous groups and consultation with other federal agencies.

“I have taken into consideration the degree to which the (mine’s) environmental design features, monitoring, and mitigation measures will, where feasible, minimize adverse environmental impacts on (federal lands),” the Forest Service’s Matthew Davis said in the report.

Perpetua, which changed its mine design three times in response to critics, said it believes it can make the mine – roughly 138 miles (222 km) north of Boise – “the best it can be.”

“Every detail of this project was examined with a fine-tooth comb,” said Jon Cherry, Perpetua’s CEO.

Perpetua will need to obtain a wetlands permit from the US Army Corps of Engineers, although the Forest Service said its own decision was made in consultation with that agency, implying a smooth review process.
Finances

The Stibnite project was forecast in 2020 to cost $1.3 billion, a number expected to rise due to post-pandemic inflation. The site has estimated reserves of 148 million pounds of antimony and 6 million ounces of gold.

The Pentagon committed nearly $60 million to fund permitting for the project, which would entail cleaning and expanding a site that was polluted by World War Two-era mining.

Perpetua last April received a letter of interest from the US Export-Import Bank, the government’s export credit agency, for a loan worth up to $1.8 billion to fund the Stibnite project.

The project has not won the support of Idaho’s Nez Perce tribe, which is concerned it could affect the state’s salmon population.

The tribe, though, was consulted for the permit review and changes were made to address their concerns, according to the record of decision.

Representatives for the Nez Perce were not immediately available for comment.

(By Ernest Scheyder; Editing by Matthew Lewis)

Why both Biden and Trump oppose Japan's takeover of US Steel

Nik Martin

DW

January 3, 2025

US President Joe Biden has vetoed Nippon Steel's $14.9-billion takeover bid for its American rival, US Steel. Amid bipartisan opposition to the merger, DW asks why US politicians and regulators are concerned.

US Steel is facing declining revenues and profitability due to competition from foreign rivals

Image: Gene J. Puskar/AP Photo/picture alliance

After months of opposition, US President Joe Biden on Friday blocked the proposed buyout of the United States Steel Corporation, or US Steel, by Japan's Nippon Steel.

The second-largest US steelmaker had previously approved the $14.9-billion (€14.5-billion) takeover bid, saying it would help protect the ailing firm from intense competition from abroad, including China.

Nippon Steel had hoped the acquisition would help hike its global steel output by nearly a third, to 85 million tons.

Nippon Steel, headquartered in Chiyoda, Tokyo, is Japan's largest steelmaker

Image: Richard A. Brooks/AFP

However, the merger became a significant issue for Democrats and Republicans in November's US presidential election, as Pennsylvania, where US Steel is headquartered, was a critical swing state.

In an attempt to protect American jobs, the United Steelworkers union fiercely opposed the transaction.
Why Biden has blocked the deal

Biden has cited national security concerns and risks to key supply chains as his main reasons for vetoing the purchase.

"This acquisition would place one of America's largest steel producers under foreign control and create risk for our national security and our critical supply chains," Biden said in a statement. "That is why I am taking action to block this deal."

The president previously said that critical industries, like the steel sector, must remain under the control of domestic players.

In December, the Committee on Foreign Investment in the United States (CFIUS) — which reviews mergers and acquisitions of US firms by foreign entities — failed to reach a consensus on whether to approve the deal and referred the decision to Biden, who leaves office on January 20.

The panel, led by Treasury Secretary Janet Yellen, warned the buyout could lead to a cut in US steel output, which would cause supply shortages, affecting the transport and energy sectors the most.

CFIUS warned the deal could scupper Washington's attempt to quash the dumping of cheap steel from China, where heavy industries receive massive subsidies from the Beijing government.

Is Europe's steel industry at risk?  11:15

According to US newspaper The Washington Post, the committee was also concerned Nippon Steel could shift production to its sites in Brazil, Mexico and India after gaining control of US Steel.

Senior White House advisers had reportedly tried to persuade Biden to proceed with the purchase, as it would represent a sizable investment in an ailing US company. They also thought a veto could hurt ties with Japan, one of Washington's closest allies in the Indo-Pacific.

Both Biden and former President Donald Trump implemented protectionist policies in recent years to safeguard the US steel sector against a global oversupply, which has driven down prices. The measures included 25% tariffs on imported steel, while China was singled out for unfair trade practices.

Biden's veto is unlikely to be overturned by President-elect Trump, who campaigned on reviving US heavy industry, and last month wrote on his Truth Social social messaging platform that he was "totally against the once great and powerful US Steel being bought by a foreign company."

Trump has promised to use a mix of more tariffs and tax incentives to protect the US steel sector.

Trump plans new tariffs on Canada, China and Mexico 04:28

What have Japan, Nippon Steel said about veto?

In a last-ditch attempt to get the deal approved, Nippon Steel proposed giving Washington a say in any potential production cuts at US Steel, Reuters news agency reported earlier this week, citing a source familiar with the deal.

In December, Nippon Steel defended the merger, promising "significant" investments in US Steel's facilities and employees to "ensure a vibrant future for American steelmaking." The firm said it remained "confident that the acquisition will protect and grow US Steel, creating the best steelmaker with world-leading capabilities for the benefit of American workers and customers."

Nippon Steel has pledged over $2.7 billion in capital investment for US Steel's facilities in Pennsylvania and Gary, Indiana, and offered to move its US headquarters to Pittsburgh, where US Steel is based. It has also promised to honor existing agreements with unions.

Nippon Steel promised to invest $2.7 billion in the US, including the Edgar-Thomson plant, the world's oldest integrated steel mill 

Image: Gene J. Puskar/AP/dpa/picture alliance

In November, Japanese Prime Minister Shigeru Ishiba urged Biden to approve the merger to avoid weakening ties between the two countries.

Both Nippon Steel and US Steel have insisted the deal poses no national security concerns and vowed to pursue legal action, claiming US officials failed to follow proper procedures while reviewing the acquisition.

What could be the impact of Biden's decision?

While it may preserve the independence of US Steel, Biden's veto could leave the steelmaker struggling to secure the capital and technology needed to modernize.

It would leave the firm unable to compete against larger, better-funded global steelmakers like ArcelorMittal or Chinese rivals.

US Steel could now face difficulties finding a buyer for the entire company. A cash and stock deal in August 2023 by rival Cleveland-Cliffs was worth around half of the amount of the Nippon Steel bid. At the time, US Steel rejected the union-backed deal, and a few months later approved the Nippon Steel merger plan.

By blocking the acquisition, Biden is also signaling to other international investors that they may face political and regulatory hurdles when bidding for US firms deemed critical for national security.

The decision is also likely to widen China's grip on the global steel sector and could even prompt the European Union to seek foreign investments from the likes of Nippon Steel for its steel players.

Edited by: Uwe Hessler

What’s next after Biden blocked the $15bn Nippon Steel/US Steel deal?

Reuters | January 4, 2025 |

US president Joe Biden. (Image by Gage Skidmore, Flickr)

US President Joe Biden blocked Nippon Steel’s proposed $14.9 billion purchase of US Steel citing national security concerns, in a potentially fatal blow to the deal after a year-long review.


Biden, President-elect Donald Trump and an influential labor union opposed the effort by Japan’s top steelmaker to acquire the iconic American firm, which would have created the world’s third-largest steelmaker, according to World Steel Association data.

The path forward is unclear. The companies could sue the US government, another buyer could swoop in for US Steel, or Republicans who favor the deal could urge Trump to find a way to approve it.

Here is what could come next:

The deal itself

The proposed deal has not yet been terminated by the companies even after Biden blocked the deal.

In a joint statement, Nippon and US Steel called Biden’s decision “unlawful,” and Nippon Steel may file a lawsuit against the US government challenging the procedures behind the decision, Japan’s Nikkei business daily reported on Saturday.


David Burritt, US Steel’s chief executive, said on Friday “we intend to fight President Biden’s political corruption.”

Some lawyers, such as Nick Wall, M&A partner at Allen & Overy, have said a legal challenge would be tough.

Nippon Steel argued it made numerous concessions, including offering to move its headquarters to Pittsburgh, to meet the demands of CFIUS, the Committee on Foreign Investment in the United States, the panel that decides on whether foreign purchases of US companies should go forward.

CFIUS was split over a decision and did not make a recommendation on the deal.

“If they go to court most of the decisions by the various CFIUS agencies will be made public,” said Brett Lambert, a former senior Pentagon official under Barack Obama, citing the rare move to forward a split decision to the president.

If the deal does not go through, Nippon Steel would have to pay a $565 million break-up fee.
US Steel’s future

Pittsburgh-based US Steel had warned that mills could close and thousands of jobs would be at risk without the deal. US Steel’s profits have dropped for nine straight quarters amid a global industry downturn, but it still sports a forward price-to-earnings ratio of 12.87, more expensive than US peers, according to LSEG data.


The United Steelworkers union, which opposed the deal, has called the company’s warnings baseless, saying Friday that it is clear that US Steel’s recent financial performance shows it “can easily remain a strong and resilient company.”

Other suitors could emerge. US-based Cleveland-Cliffs, which previously bid for the company, could come back with a lower offer. However, its market value is now smaller than that of US Steel.

“One would suspect that Nucor and Cleveland Cliffs will be in discussions with US Steel, but based on presidential messages one would think the US government may come to its aid and invest in its infrastructure,” said Jay Woods, chief global strategist at Freedom Capital Markets.
Trump’s position

Trump, who takes office on Jan. 20, has repeatedly vowed to block the sale, a view he shared with Biden.

“I am totally against the once great and powerful US Steel being bought by a foreign company, in this case Nippon Steel of Japan,” he wrote on his Truth Social platform last month. “As president, I will block this deal from happening. Buyer Beware!!!”

Trump’s transition team did not comment on Friday. However, several current and former Republican officeholders on Friday criticized Biden’s decision, saying it would cost investment in the US.
US-Japanese relations

Some analysts warned that blocking the deal could sour relations between the United States and Japan, which Biden had worked on improving to counter the threat of China’s economic and military rise.

Japan is the top US investor in the US and its biggest business lobby has raised concerns about political pressure on the deal, a view the White House rejected.

“It would have helped us rebuild our competitiveness and counter China. To do this effectively, we need our friends, particularly Japan,” Wendy Cutler, who served as a senior trade negotiator under former President Barack Obama, wrote on social media platform X.

Trump’s stance on trade could add to that unease when he returns to office, as he has already threatened heavy tariffs on key allies Canada, Mexico and Europe.

(By John Geddie, Andrea Shalal, David Shepardson, Alexandra Alper, Aatreyee Dasgupta and David Gaffen; Editing by Sonali Paul)

Biden’s veto of US Steel deal raises multitude of new questions

Bloomberg News | January 3, 2025 | 

Rolls of galvanized steel sheet. Stock image.

US President Joe Biden’s decision to block Nippon Steel Corp.’s $14.1 billion takeover of United States Steel Corp. has sparked fresh uncertainty for the American icon that’s been at the heart of a domestic political firestorm in the US and fueled tensions with long-time diplomatic ally Japan.


Biden announced his formal decision on Friday after the case was referred to him by a US security review panel and US Steel shares fell in response, trading well below Nippon Steel’s $55 per share offer for the firm, which traces its roots back to 1901 when J. Pierpont Morgan merged a collection of assets with Andrew Carnegie’s Carnegie Steel Co.


There are a number of avenues the company might now go down to secure its future as Donald Trump prepares to take the reins of the US government from Biden.

Here’s a look at what could happen.

Can Biden’s decision be challenged?

It’s a high bar. US statute makes it clear that American presidents are granted the power to kill a deal they deem a threat to national security, and the codification of that law means it is unlikely to be an attractive case for the Supreme Court, were appeals to reach that level.

The Committee on Foreign Investment in the United States, a secretive panel that scrutinizes proposals by foreign entities to purchase companies or property in the US, was unable to reach a decision on the deal, sending it to the White House for final word.

However, US Steel and Nippon Steel might argue on procedural grounds. Cfius sent a letter to the companies in late August, saying that the deal posed a threat to national security. The companies intervened with a 100-plus page letter and a meeting in Washington with the Cfius panel, which granted an extension.

The chain of events was unusual. Companies are typically given a warning that a deal has problems that need mitigation, and then are given time to address those issues. In this case, there wasn’t the same warning time given, which could leave the door open for litigation. Though, it still may be a tough uphill climb to win a case.
What’s next?

US Steel and Nippon Steel on Friday issued a joint statement saying that Biden’s move “reflects a clear violation of due process and the law governing Cfius,” and that the companies “will take all appropriate action to protect their legal rights.”

“We believe that President Biden has sacrificed the future of American steelworkers for his own political agenda,” the statement said. “We are committed to taking all appropriate action to protect our legal rights to allow us to deliver the agreed upon value of $55.00 per share for US Steel’s stockholders upon closing.”

Bloomberg News previously reported that US Steel and Nippon Steel were likely to jointly file lawsuits related to the deal. While it’s not clear exactly what the lawsuits will look like, they would probably challenge various parties that the companies believed worked against the best interests of their shareholders.
What were some of the reactions?

Pennsylvania Governor Josh Shapiro, a Democrat who didn’t publicly advocate for or against the deal, issued a muted statement, saying he expects “any other potential buyers to demonstrate the strong commitments to capital investment and protecting and growing Pennsylvania jobs that Nippon Steel placed on the table.” He called on US Steel to refrain from threatening the jobs of current union workers and keep the headquarters in the state.

“This matter is far from over – we must find a long-term solution that protects the future of steelmaking in Western Pennsylvania and the workers who built US Steel and built this country,” he said.

JPMorgan Analyst Bill Peterson wrote in note that there are “limited avenues moving forward” as foreign ownership for US Steel is “seemingly off the table.”

“Despite Japan being both a close ally and the largest foreign investor in the US, we view the deal’s demise as a clear deterrent for foreign entrants interested in buying entry into the US steel market,” Peterson wrote.
Are there break fees?

Nippon Steel’s deal to buy US Steel included a $565 million break fee for the American company. And, yes, it still must be paid despite the transaction being killed by the government.
What does the blocked deal mean for US-Japan relations?

The deal is a strain on ties with a key ally — and one crucial in the US race against China. Japan’s previous prime minister, hosted by Biden earlier this year as the issue swirled, had largely distanced himself from the tensions. The decision also sends a message that no US ally or industry is immune to a potential national security investigation, and it’s a sign of a continued bipartisan move to treat steel as a strategic sector.

Some experts have warned of a chilling effect for foreign companies looking to acquire US assets, given that the fees — legal, banking and others — might be enough to dissuade competitive offers from non-US bidders who may not want to risk going through a process that could end up empty handed.

President-elect Donald Trump said in a Truth Social post that he would fast track approval for any country will to invest $1 billion inside US borders. But Trump has also said he would have also blocked Nippon Steel’s bid amid worries over the steelmaker being foreign owned.

What other options can US Steel pursue?

Beyond legal actions, there will be other options for US Steel’s board to evaluate. It will likely re-consider whether to sell all or parts of the company.

Cleveland-Cliffs offered a losing bid last year for $54 per share in cash and stock, which was broadly as seen as inferior to the all-cash $55 per share offer Nippon Steel put in. But it’s unclear if Cleveland-Cliffs or other bidders are ready to come back to the table.

The board may also consider splitting the company into parts, which was discussed during the bidding process in 2023. That option would likely mean a split between legacy assets and newer facilities.

Of course, there’s a scenario where US Steel doesn’t put anything on the selling block and goes back to the way it was operating before the saga began.

But chief executive officer David Burritt had warned that if the deal with Nippon Steel were to fall through that US Steel might need to shutter plants and consider moving its headquarters, currently in Pittsburgh. That would all be contingent on board approval.
What’s does this mean for the steel union?

Biden’s decision is a significant win for David McCall, president of United Steelworkers. McCall had been staunchly critical of the deal from the day it was announced and successfully earned the support of Biden early on in the saga. The question remains how the union’s rank-and-file members, many of whom supported the takeover, will feel about McCall and his leadership team’s relentless push against Nippon Steel’s bid.

In a statement Friday, the United Steelworkers said Biden’s decision was “the right move for our members and our national security.”
What’s next for Nippon Steel?

The takeover would have made Nippon Steel the world’s No. 3 steelmaker, with the transaction aimed at reducing its dependence on the waning Japanese market and helping it compete with the big mills in China. Now, Nippon Steel could bolster efforts in other growth markets. Analysts have pointed to India as one possibility.

(By Joe Deaux and Josh Wingrove)

Steelworkers Union Applauds as Biden Blocks Sale of US Steel to Japanese Giant

"We're grateful for President Biden's willingness to take bold action to maintain a strong domestic steel industry and for his lifelong commitment to American workers," said United Steelworkers International President David McCall.

U.S. President Joe Biden speaks on proposing tariffs on Chinese steel at the United Steelworkers Headquarters in Pittsburgh, Pennsylvania on April 17, 2024.
(Photo: Kyle Mazza/Anadolu via Getty Images)

Eloise Goldsmith
Jan 03, 2025
COMMON DREAMS

The United Steelworkers union commended a decision by President Joe Biden, announced Friday, to block a proposed acquisition of U.S. Steel by the Japanese company Nippon Steel.

United Steelworkers International President David McCall said in a statement that the union is "grateful" to Biden for his "willingness to take bold action to maintain a strong domestic steel industry and for his lifelong commitment to American workers."

"We now call on U.S. Steel's board of directors to take the necessary steps to allow it to further flourish and remain profitable," he added.

McCall toldReuters in mid-December that Nippon Steel had not given him an assurance that the Japanese firm is committed to ensuring the lasting success of U.S. Steel. "When we've had discussions with them there's been nothing that would assure us that there's a long-term viability in the operations," McCall said in an interview with the outlet.

In December 2023, U.S. Steel—the Pittsburgh-headquartered company that played a key role in establishing U.S. industrial might—announced that it had entered an agreement to be acquired by Nippon Steel for $14.9 billion. The deal drew scrutiny from lawmakers, federal regulators, and the United Steelworkers union, causing its closing to be delayed. Biden, who has made reviving "American-style" industrial policy a key part of his presidency, has long indicated his opposition to the deal.

Biden said he ultimately decided to block the proposed acquisition because he believes that "a strong domestically owned and operated steel industry represents an essential national security priority and is critical for resilient supply chains."

The Committee on Foreign Investment in the United States, a federal committee that has the power to review certain transactions involving foreign investment in the United States to evaluate a deal's impact on national security, decided to forgo making a formal recommendation about whether the deal should be allowed to proceed last week.

The proposal also became ensnared in election year politics, with both presidential candidates saying that U.S. Steel should remain a domestically-owned firm. Rust Belt lawmakers in both parties, including Sen. Bob Casey (D-Pa.) and Sen. Sherrod Brown (D-Ohio)—both of whom lost re-election in November—and Vice President-elect JD Vance, an Ohio Republican, expressed opposition to the deal.

Shortly after the deal was unveiled, multiple Pennsylvania Democrats, including Casey and Rep. Summer Lee, wrote to the president of Nippon Steel expressing concerns about the failure of the two firms to consult or notify the United Steelworkers union ahead of the announcement, according to Reuters.

"From the beginning, the workers who power this company should have had a seat at the negotiating table—their livelihoods hung in the balance. No matter what, I will keep fighting to protect Western PA Steelworker jobs and American steelmaking," wrote Representative Chris Deluzio (D-Pa.) on Friday.

U.S. Steel, for its part, has attempted to refute criticisms of the deal. David B. Burritt, the president and chief executive of U.S. Steel, penned an op-ed in The New York Times in December, arguing that blocking the deal would help China. "With this deal, our workers' jobs would be more secure, our customers would be better served and China's domination of global steel production would be weakened. Without it, we would become more vulnerable," he wrote.

"Nippon Steel and U.S. Steel are confident that our transaction would revitalize communities that rely on American steel," the two firms said in a joint statement Friday. They condemned Biden's decision as "unlawful" and said that the president's "statement and order do not present any credible evidence of a national security issue, making clear that this was a political decision."

"Following President Biden's decision, we are left with no choice but to take all appropriate action to protect our legal rights," they wrote.

This article was updated to include a statement from Nippon Steel and U.S. Steel.

Steelworkers union criticizes Nippon Steel’s proposal for lack of long-term commitment

Reuters | January 2, 2025 | 

Production of steel castings. Stock image.

The United Steelworkers union expressed concerns about Nippon Steel’s latest proposal that gives the US government veto power over any potential reductions in US Steel’s production capacity, if they get the approval to merge.


The union, which has opposed US Steel’s merger with the Japanese steel giant, said Nippon’s offer fails to commit to sustaining production over the long term or enhancing domestic capacity in integrated facilities.

“Protecting capacity only means moth-balling our equipment, allowing it to rust away to the point that it is no longer feasible to re-start,” the union said in a statement on its website on Thursday.

The proposal “is nothing but a “Hail Mary” pass destined to fall to the ground,” it added.

On Tuesday, reports said Nippon Steel made a proposal to give the government a final say over any potential production cuts, as part of its efforts to secure President Joe Biden’s approval for acquiring the American steelmaker.

In 2023, Nippon clinched the deal to buy US Steel at a hefty premium, but the merger has since faced opposition from the powerful Steelworkers’ union as well as politicians.

“The truth remains that this transaction is the best way to ensure that US Steel, including its employees, communities, and customers, will thrive well into the future,” US Steel said on Thursday in response to the union’s statement.

The Committee on Foreign Investment in the United States (CFIUS) has referred the decision to approve or block the deal to Biden, who must decide on the deal by Jan. 7.

If he takes no action, it would result in the merger’s automatic approval.

Nippon Steel did not immediately respond to Reuters‘ request for comments.

(By Shivansh Tiwary and Anshuman Tripathy; Editing by Shinjini Ganguli)