Cliffs CEO lashes out at U.S. Steel in first major comments on Nippon deal

Cleveland-Cliffs leaders on Tuesday lashed out at U.S. Steel for its proposed sale to Nippon Steel over its own offer, saying the Pittsburgh giant was motivated by hostility toward the United Steelworkers union.

In his most strident public comments since the announcement, CEO Lourenco Goncalves argued Cliffs — the largest mine operator on the Iron Range — has cutting-edge technology, lower carbon emissions and is the better choice for labor as he pressured President Joe Biden’s administration to block the $14.1 billion megadeal with Nippon of Japan.

“Let’s talk turkey here, that management team and that board had one goal in mind and that was to break the back of the United Steelworkers,” Goncalves said of U.S. Steel during a call with investors. “I am a big supporter of unionized labor because it goes against bosses like [U.S. Steel CEO] Dave Burritt. These type of people need to go.”

The merger could have huge implications for the Range, where U.S. Steel owns both the Keewatin and Minntac operations, where mine workers are represented by the Steelworkers. U.S. Steel also has a stake in the Hibbing Taconite mine.

Goncalves’ appeal to labor support comes after Biden’s administration recently signaled Nippon may have to better accommodate USW to close the deal. The union had backed a deal with Cliffs and reacted with frustration after the agreement with Nippon union leaders said was a surprise.

U.S. Steel and Nippon officials did not respond to a request for comment.

While U.S. Steel and Nippon leaders have both said they will work with the union, USW President David McCall said in December the union does not believe Nippon understands the full breadth of contract obligations and doesn’t know if the company has the capacity to live up to the contract, including by funding pension and retiree insurance benefits.

Goncalves said Cliffs was poised to take steps to ease antitrust concerns should it have secured a deal for the legendary U.S. Steel, which he said overrated potential regulatory risk. And Goncalves applauded Biden and federal lawmakers on both sides of the political aisle for raising concerns about the deal with Nippon.

Biden said in December the potential sale deserves “serious scrutiny,” and the administration will likely be reviewed for national security risks. Bloomberg in January reported that review could run into next year. The federal Committee on Foreign Investment in the United States can block or change the deal.

Celso Goncalves, chief financial officer for Cliffs, said his company’s final offer was a mix of cash, stock and “synergy value” worth more than $60 per share. Nippon said it would pay $55 per share in an all-cash deal.

“Unfortunately, we could not deliver this superior value to U.S. Steel stockholders because the U.S. Steel board stood in the way and was hell bent to sell to a foreign entity,” Lourenco Goncalves said.