Nippon Steel Investment Would Generate Incremental Economic Impact of Nearly $1 Billion in Pennsylvania Beyond Base Investment

Rhea-AI Summary

U. S. Steel released an economic impact analysis conducted by Parker Strategy Group, assessing the potential impact of Nippon Steel's proposed $1 billion investment to modernize U. S. Steel's Mon Valley Works following their pending merger. The study focuses on a $600 million construction project in Pennsylvania, with various spending scenarios.

Key findings include:

• An 80% in-state spending scenario would generate a $952.9 million incremental economic impact over two years
• Creation of nearly 5,000 construction jobs
• Generation of $38 million in taxes

The investment aims to extend the production life of integrated assets and enhance steel supply security for American manufacturers. U. S. Steel CEO David B. Burritt emphasized the positive economic impact on Pennsylvania communities and families.

Positive

• Nippon Steel commits to investing $1 billion in Mon Valley Works operations
• Potential creation of 4,864 jobs over a two-year period with 80% in-state spending
• Projected $952.9 million incremental economic impact over two years with 80% in-state spending
• Generation of $38 million in taxes
• Extension of production life for integrated assets
• Enhanced security of steel supply for American manufacturers

Negative

• None.

Insights

Financial Analyst

The proposed $1 billion investment by Nippon Steel in U. S. Steel's Mon Valley Works facilities represents a significant economic catalyst for Pennsylvania. The study's projections of a $952.9 million incremental economic impact and creation of 4,864 jobs over two years, assuming 80% local spending, are substantial. This investment goes beyond the $1.4 billion already committed to BLA-covered facilities, demonstrating a strong commitment to the region.

Key points to consider:

• The investment could generate $38 million in taxes, bolstering local government revenues.
• The upgrade would extend the production life of integrated assets, potentially improving U. S. Steel's competitiveness and long-term prospects.
• Enhanced security of steel supply for American manufacturers could strengthen U. S. Steel's market position.

While the economic benefits are clear, investors should also consider the execution risks and the time frame for realizing these benefits. The actual impact may vary based on the final investment allocation and local economic conditions.

Market Research Analyst

This investment represents a significant vote of confidence in U. S. Steel's operations and the broader Pennsylvania steel industry. The economic multiplier effect is noteworthy, with even a 40% in-state investment generating substantial job creation and economic impact. This could lead to:

• Increased consumer spending in local communities
• Potential for attracting additional investments in the region
• Strengthening of the local supply chain and small businesses

The study's findings of U. S. Steel's existing $3.6 billion economic impact in PA and support of 11,417 jobs underscore the company's importance to the state economy. This new investment could further cement U. S. Steel's role as an economic anchor. However, investors should monitor the actual implementation and any potential challenges in realizing these projected benefits, as well as the broader steel market conditions that could affect the long-term success of this investment.

Study finds that upgrade of U. S. Steel’s Mon Valley Works facilities would lead to nearly 5,000 construction jobs and $38 million in taxes

PITTSBURGH--(BUSINESS WIRE)-- United States Steel Corporation (NYSE: X) (“U. S. Steel”) released a new economic impact analysis today, conducted by Parker Strategy Group, that assesses how the proposed $1 billion investment committed by Nippon Steel Corporation (“Nippon Steel”) to modernize U. S. Steel’s Mon Valley Works following the closing of the pending merger with U. S. Steel would generate a significant economic impact in Pennsylvania.

For the purposes of the study, construction ($600 million) and equipment costs ($400 million) are separated and it is assumed that $600 million of the $1 billion investment would be spent in Pennsylvania.

Considering the supply chain and labor realities that would reduce in-state spending for any major construction project in the Mon Valley, the study looked at a range of spending scenarios.

According to the study, if just 80% of the $600 million construction project is spent in Pennsylvania, the Nippon Steel investment would generate a $952.9 million incremental economic impact over a two-year timeframe.

Nippon Steel is committed to investing no less than $1 billion in the Mon Valley Works operations following closing of the transaction to extend the production life of integrated assets and enhance the security of steel supply to American manufacturers. Together with the previously announced $1.4 billion capital expenditures in BLA-covered facilities, these investments are strong commitments to the region and union-represented facilities that go well beyond what is currently required by the Basic Labor Agreement.

Among the findings, the study showed concentrated economic impact to Southwest Pennsylvania and increased impact if construction dollars are spent in Pennsylvania.

“Not only will this deal secure U. S. Steel’s Pennsylvania footprint – an economic boon benefiting communities and employees – the Nippon Steel investment in Mon Valley Works facilities would cause a positive ripple effect across the Pennsylvania economy,” said President and Chief Executive Officer of U. S. Steel David B. Burritt. “While the economic impact is undeniable, what is most heartening is the consequential economic and generational impact this investment will have on the families and communities of the Mon Valley.”

The study predicts that when just 40% of the investment is spent in state it would create nearly 2,500 jobs and generate an almost half billion-dollar economic impact (2,432 jobs, $476.4 million total impact) over a two-year period.

When 80% of the project costs are spent in Pennsylvania, the impact increases dramatically doubling the number of jobs created (4,864 jobs) and generating almost $1 billion in economic impact ($952.9 million total impact) over a two-year period.

“The Nippon Steel investment makes possible a generational upgrade at the Mon Valley Works facilities that will only occur if the transaction closes,” said Scott Buckiso, Senior Vice President & Chief Manufacturing Officer, North American Flat-Rolled Segment. “With a new lease on life, these facilities would support and sustain jobs at U. S. Steel and across the region for small businesses that depend on our continued presence in the Mon Valley.”

Read the full economic impact study here.

A 2023 economic impact study showed that U. S. Steel’s operations in PA generated $3.6 billion in total economic impact, supported and sustained 11,417 jobs through its operations and purchases from the local supply chain, and generated $138.2 million in state and local taxes as a result of operations and capital spending.

About U. S. Steel

Founded in 1901, United States Steel Corporation is a leading steel producer. With an unwavering focus on safety, the Company’s customer-centric Best for All® strategy is advancing a more secure, sustainable future for U. S. Steel and its stakeholders. With a renewed emphasis on innovation, U. S. Steel serves the automotive, construction, appliance, energy, containers, and packaging industries with high value-added steel products such as U. S. Steel’s proprietary XG3® advanced high-strength steel. The Company also maintains competitively advantaged iron ore production and has an annual raw steelmaking capability of 22.4 million net tons. U. S. Steel is headquartered in Pittsburgh, Pennsylvania, with world-class operations across the United States and in Central Europe. For more information, please visit www.ussteel.com.

About Parker Strategy Group

With over 50 years of combined experience, Parker Strategy Group is a national consulting firm specializing in economic impact with extensive experience across the government, corporate, and non-profit sectors. We are committed to delivering statistically valid, industry-respected results that give organizations the confidence that their analysis is both defensible and actionable for internal and external audiences.

Led by Nichole Parker, a national economic impact expert with over 30 years of experience and more than 600 economic impact studies, Parker Strategy Group excels in producing economic analysis that is both defensible and easily understood. Nichole’s deep expertise as an economic analyst enables clients to confidently explain their impact to key audiences. Past and current clients include FGS Global, University of Washington, Penn State University, and the Association of Independent Colleges of Pennsylvania.

www.parkerstrategygroup.com

Cautionary Note Regarding Forward-Looking Statements

This press release contains information regarding United States Steel Corporation (the “Company”) that may constitute “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 and other securities laws, that are subject to risks and uncertainties. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in those sections. Generally, such forward-looking statements are identified by using the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “target,” “forecast,” “aim,” “should,” “plan,” “goal,” “future,” “will,” “may” and similar expressions or by using future dates in connection with any discussion of, among other things, statements regarding the proposed transaction between the Company and Nippon Steel Corporation and the potential impact of investments that Nippon Steel may make in certain of the Company’s facilities. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements include all statements that are not historical facts. Many of these statements depend on matters which, by their nature, are inherently uncertain and outside of the Company’s control. Caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from present expectations or projections. Risks and uncertainties include without limitation: the ability of the parties to consummate the proposed transaction between the Company and Nippon Steel Corporation, on a timely basis or at all; the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the proposed transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreement and plan of merger relating to the proposed transaction (the “Merger Agreement”); and the risk that the parties to the Merger Agreement may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all. The Company directs readers to its Form 10-K for the year ended December 31, 2023, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and the other documents it files with the SEC for other risks associated with the Company’s future performance. These documents contain and identify important factors that could cause actual results to differ materially from those contained in the forward-looking statements. The Company does not undertake any duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations whether as a result of new information, future events or otherwise, except as required by law.

Disclaimer

This economic analysis report is an independent analysis of Parker Strategy Group and is based upon certain information provided by United States Steel Corporation and is subject to certain assumptions. The conclusions presented in the report are the result of Parker Strategy Group’s independent analysis and have not been verified by United States Steel Corporation, Nippon Steel Corporation or their affiliates. Actual outcomes may differ.

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U. S. Steel Media Relations

T - (412) 433-1300

E - media@uss.com

Source: United States Steel Corporation

FAQ

What is the projected economic impact of Nippon Steel's $1 billion investment in U. S. Steel (X) Mon Valley Works?

According to the study, if 80% of the $600 million construction project is spent in Pennsylvania, Nippon Steel's investment would generate a $952.9 million incremental economic impact over a two-year timeframe.

How many jobs could be created by Nippon Steel's investment in U. S. Steel (X) Mon Valley Works?

The study predicts that with 80% of the project costs spent in Pennsylvania, the investment could create 4,864 jobs over a two-year period.

What is the purpose of Nippon Steel's $1 billion investment in U. S. Steel (X) Mon Valley Works?

The investment aims to modernize U. S. Steel's Mon Valley Works facilities, extend the production life of integrated assets, and enhance the security of steel supply to American manufacturers.

How much tax revenue is expected to be generated from Nippon Steel's investment in U. S. Steel (X)?

The study indicates that the investment would generate $38 million in taxes.