Debt to decarbonisation: Challenges for Nippon Steel

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Nippon Steel on Saturday touted a “historic partnership” with US Steel after President Donald Trump approved a multi-billion-dollar merger.
But the Japanese giant faces numerous headwinds going forward.
Here are some of the challenges facing the company, from trade tariffs to lacklustre global demand:
Nippon Steel and US Steel said they had “entered into a National Security Agreement” with the US government, which “provides that approximately $11 billion in new investments will be made by 2028”.
Former president Joe Biden had blocked the deal on national security grounds shortly before leaving the White House.
Other conditions include a so-called “golden share” for the US government, giving it more control over the company, as well as non-specified “commitments” related to domestic production and trade.
“All necessary regulatory approvals for the partnership have now been received, and the partnership is expected to be finalized promptly,” the companies said in a statement.
Ratings agency S&P last month said that the “huge financial burden” of the deal could cause it to downgrade Nippon Steel more severely than planned.
Bloomberg Intelligence’s Michelle Leung also warned in May that the $14.9 billion merger would “significantly increase the Japanese firm’s debt burden from the current $16.7 billion”.
“A deal might help Nippon Steel diversify beyond its sluggish domestic market, though it would need to invest heavily to help repair the aging assets of US Steel,” she said.
Some shareholders have expressed alarm, with activist investor 3D Investment Partners calling for opposition to the reappointment of Nippon Steel executives at an upcoming annual general meeting.