According to Zhītōng Cáijīng APP, a radical group of shareholders stated that the proposal for Nisshin Steel to acquire United States Steel (X.US) may increase the decarbonization cost of Japan's largest steelmaker and urged the company to address the impact of the acquisition on its climate goals.
As the fourth largest global steelmaker, Nisshin Steel announced last year that it would acquire United States Steel for $15 billion. Although United States Steel supported the bid, it was met with strong opposition from unions and the White House. However, United States Steel CEO David Burritt recently stated that he is "very confident" that Nisshin Steel's acquisition of the company will be completed this year.
Brynn O'Brien, Executive Director of the Australian Centre for Corporate Responsibility (ACCR), said, "The 11 blast furnaces of United States Steel could be incorporated into Nisshin Steel's operations and almost certainly increase the decarbonisation cost of the company."
ACCR, which holds less than 1% of Nisshin Steel's shares, has submitted a shareholder proposal with two other institutional shareholders, Corporate Action Japan (CAJ) and Legal & General Investment Management (LGIM), calling on the company to improve its decarbonisation strategy.
"CAJ hopes to obtain more information on the company's carbon emission targets, so that investors including us can make appropriate evaluations of the total decarbonisation cost and other risks of the entire group," said Yasunori Takeuchi, CEO of the non-profit organization CAJ.
Nisshin Steel will hold its annual general meeting of shareholders on June 21.
According to the plan announced in 2021, Nisshin Steel estimates that decarbonisation by 2050 could cost as much as JPY 55 trillion ($348 billion) in capital expenditure, including research and development, some of which will be funded by the government.
"Nisshin Steel needs to consider the impact of this acquisition on its decarbonisation plan and communicate this transparently," said O'Brien.
As part of the acquisition proposal, Nisshin Steel pledged to invest at least $1.4 billion in technology upgrades for United States Steel factories to "produce more advanced and eco-friendly steel."
In order to help achieve decarbonisation, Nisshin Steel hopes to inject hydrogen into its coke-using blast furnaces and is testing the process at a steel plant near Tokyo. The company also plans to use carbon capture, utilization, and storage technology, and to increase the use of electric arc furnaces.