Decarbonization, Mexico’s USMCA role and Nippon Steel-U.S. steel merger figured prominently at GSDF 2024 Conference
The two-day Global Steel Dynamics Forum (GSDF) in New York kicked off on June 17, with opening remarks by Ronald Ashburn, the executive director, American Iron & Steel Technology, highlighting the opportunities inherent in the Biden administration’s $1.2 trillion Infrastructure Investment and Jobs Act, for upgrading roads, bridges, electric grid, etc. as also to the H2 Infrastructure CHIPS and Science Act with a potential investment tag of $280 billion allocated for domestic semiconductor manufacturing, R&D workforce development, etc. and the Inflation Reduction Act with an investment potential of US$394 billion for clean energy and transmission, electric vehicle incentives, etc.
Interviewed onstage by Philipp Englin, CEO of World Steel Dynamics, Lourenco Goncalves, the outspoken chairman/president and CEO of Cleveland-Cliffs Inc., seen as the architect of Cleveland-Cliffs’ strong position in the U.S. steel market, and its expansion with two major acquisitions of AK Steel and ArcelorMittal USA, said that Mexico should be excluded from the USMCA for allowing foreign companies to ship the “heavily government subsidized steel produced with a high degree of pollution” to the USA.
Mexico provided a “dumping road” for such steel shipments. Clearly, the remarks were aimed at China which U.S. steelmakers complain is dumping its steel in the U.S. market and harming their interests.
Goncalves called for removing “the ‘M’ (Mexico) from the USMCA trade pact”. “… there should be no negotiations with Mexico because it is providing a route for shipping heavily subsidized and polluted steel to the U.S,” he later told the American Journal of Transportation at a press conference.
His views about Mexico were also echoed by Kevin Dempsey, the President/CEO, American Iron and Steel Institute (AISI) who, while welcoming President Biden’s suggestion to treble tariffs against subsidized and polluted steel imports, said that more steel in the U.S. needed to be decarbonized. Dempsey called for better documentation for emissions since natural gas was the single largest item for energy production.
In an interview with the American Journal of Transportation, Dempsey said that government allocations had become “slower but the money for infrastructure projects is still coming”. He urged the U.S. administration to take a serious approach to the Mexico problem.
“China is exporting steel via Mexico. We are having elections, and this may slow down negotiations with them … Mexico also had elections recently … but discussing China later will be crucial for the U.S. which should work out some solution about China’s shipments of subsidized and polluted steel via Mexico once the U.S. elections are over,” he noted.
Addressing the delegates, Chang In Hwa, chairman of South Korean steel giant, POSCO Group – this was his maiden appearance at an international conference since taking office in March - emphasized that POSCO would continue to invest in its secondary battery materials business and expand the application of eco-friendly steel-making methods. Chang said that the global auto industry would shift towards electric vehicle manufacturing, despite a recent slowdown. Indeed, POSCO sees this slowdown as an “opportunity to strengthen its business and to make new investments in the industry”. It would continue to focus on strengthening its value chain by stabilizing and increasing the supply of lithium and nickel products across the world, also making new investments in technologies for the development of next-generation cathode and anode active materials, Chang said.
The POSCO Group is trying to source raw materials from Africa and Latin America. Korean sources at the GSDF told this correspondent that Chang recently met with Tanzanian President Samia Suluhu Hasan to strengthen the partnership for the supply of key minerals for batteries. Tanzania is an important source for key minerals needed for battery production such as lithium, cobalt, nickel, and graphite. POSCO International, handling the group’s secondary battery material business, signed a long-term contract on sourcing graphite from Tanzanian mines last year.
For its steel business, POSCO is pushing its HyREX technology, its steelmaking method for manufacturing molten metal using iron-ore fires and hydrogen and moving towards its target of net-zero emissions by 2050, besides accelerating the introduction of artificial intelligence and robots in its steel plants.
For Stephen D. Laxton, chief financial officer and executive vice president of Nucor Corp., automotive manufacturing would be an important end market for Nucor’s annual 3-million tons sheet mill in West Virginia but “it is not the mill’s main focus”.
“Automotive, now accounting for about 7% of all the company’s steel shipments, is not going to be the focus in West Virginia, not the majority of product shipments,” Laxton said. The US$ 3.5 billion West Virginia project, expected to start in 2026, will produce 84” sheet products.
GSDF also attracted service providers, representatives of ports and regional development agencies who courted U.S. and foreign steel companies. Mike Culbertson, President/CEO of Corpus Christi Regional Economic Development Corp, said his agency, attracting $ 57.4 billion in the past decade, had helped in oil and gas exploration, as well as related midstream logistics, petrochemicals, manufacturing/fabrication, warehousing, distribution/logistics, steel manufacturing, etc.
Another agency, Mississippi Economic Development Corp., pitched for its “superior logistics facilities”. MEDC’s Executive Director, William Cork, said in a telephone interview: “We are surrounded by waterways facilitating shipping, complemented by excellent rail services. We have abundant low-cost power. European and companies from other regions have evinced great interest because of availability of iron ore, bauxite, low power and labor costs, etc.” Two international automakers, Toyota and Nissan, already have plants in Mississippi.
The last item on the GSDF agenda was an on-stage conversation between Philipp Englin, CEO of World Steel Dynamics, and David Burritt, CEO of U.S. Steel, about the Nippon Steel-U.S. Steel merger. Burritt defended U.S. Steel’s merger with Nippon Steel, arguing that it would protect workers, preserve national security and bolster the company’s technological strength while meeting U.S. Steel’s fiduciary obligations to its shareholders.
Burritt explained before the large turnout of delegates that the deal was the “best path forward” for the Pittsburgh steelmaker. For one, he said, Nippon Steel’s US$14.9 billion cash offer provides a tremendous return to shareholders. But more importantly workers would be protected as Nippon had committed to upholding the United Steelworkers’ labor contract, running into 2026, and promised to forgo any layoffs.
Besides investing US$1.4 billion in U.S. Steel’s assets, Nippon Steel would share its technological expertise; Nippon’s annual allocation of over US$500 million for research and development, more than all of the U.S. steelmakers combined.
