Cleveland-Cliffs Inc., the largest steel producer in North America, is continuing to pursue a deal to acquire U.S. Steel Corp., despite challenges from Japan's Nippon Steel. Lourenco Goncalves, the CEO of Cleveland-Cliffs, expressed his commitment to merging the two companies to create a dominant American steel producer. This comes as the regulatory review process for Nippon Steel's bid drags on, creating significant uncertainty about the future of U.S. Steel. Goncalves remains eager to finalize a deal with U.S. Steel, but is waiting on the outcome of U.S. government reviews before making any moves.
The deal between Cleveland-Cliffs and U.S. Steel has been in the works since 2023. Cleveland-Cliffs made an initial offer for the Pittsburgh-based steelmaker, but Nippon Steel entered the fray late last year with a higher bid. While U.S. Steel’s board of directors supported Nippon’s offer, President Joe Biden has voiced concerns about the potential national security risks of allowing a foreign company to take over such a significant American steelmaker. This has led to the current regulatory uncertainty, as Biden’s administration has delayed a decision on Nippon Steel’s bid. The Committee on Foreign Investment in the United States is expected to make a final ruling by December 2024.
Goncalves, who has been at the helm of Cleveland-Cliffs since 2014, is confident that his company can offer a better solution for U.S. Steel’s future. He has criticized the prolonged review process and argued that the American steel industry should remain under U.S. control. "We can create an all-American solution to resolve the problem," he said, emphasizing that Cleveland-Cliffs could step in and ensure U.S. Steel’s long-term success without relying on a foreign takeover. Goncalves also dismissed the notion that Nippon Steel’s investment would be the only viable solution for U.S. Steel, describing the idea as “totally absurd.”
Despite the uncertainty surrounding the U.S. Steel deal, Cleveland-Cliffs has been active in pursuing other acquisition opportunities. In July 2024, the company announced the acquisition of Stelco Holdings Inc., Canada’s largest steel producer, for approximately $3.85 billion. The acquisition was completed without significant opposition from Canadian regulators, and it marked a strategic move by Cleveland-Cliffs to expand its footprint in North America. Goncalves explained that the drawn-out review of Nippon Steel’s bid on U.S. Steel led him to pursue Stelco, a decision that has already paid off for his company. "I’m very happy with that," Goncalves said regarding the Stelco acquisition, noting that it was an unexpected but positive outcome.
The uncertainty surrounding U.S. Steel is not the only challenge Cleveland-Cliffs faces. The company is also navigating potential trade policy changes under the new U.S. administration. With the election of Donald Trump as president in 2024, there is growing concern about the possibility of new tariffs on steel imports. During his previous term, Trump imposed significant tariffs on Canadian steel imports, and there are fears that such measures could be revived, potentially impacting the Canadian steel industry. However, Goncalves remains optimistic that the close economic relationship between the U.S. and Canada will mitigate any negative effects. "Canada is the only country in the entire world that can claim it deserves a differentiated treatment," he said, highlighting the importance of maintaining strong ties with Canada, particularly in the steel sector.
Looking ahead, Cleveland-Cliffs is focused on maintaining its leadership in the steel industry, both in the U.S. and internationally. The company is well-positioned to capitalize on the ongoing challenges in the global steel market, including rising demand for American-made steel and the shifting dynamics of global trade. By acquiring key steelmakers like Stelco and potentially U.S. Steel, Cleveland-Cliffs aims to strengthen its position as the largest steel producer in North America and enhance its competitive edge in a rapidly changing industry.
Goncalves has made it clear that his goal is to create a steel company that is fully integrated into the U.S. market, with a strong focus on meeting the needs of American workers and businesses. He is committed to ensuring that Cleveland-Cliffs remains a driving force in the American steel industry, regardless of the outcomes of the current merger discussions. With an eye on future growth and strategic acquisitions, Cleveland-Cliffs is poised to continue its expansion and dominance in the North American steel sector, even amid uncertain regulatory and political conditions.
As Cleveland-Cliffs waits for the U.S. government to make a final decision on Nippon Steel's bid for U.S. Steel, the company remains ready to act. Goncalves’ determination to keep American steel production under domestic control signals the growing importance of the steel industry in the broader economic and political landscape. Whether through further acquisitions or expansion of its existing operations, Cleveland-Cliffs is set to play a pivotal role in shaping the future of steel manufacturing in North America.
