US senator urges Biden to review alleged Nippon Steel ties to China

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By David Shepardson and Yuka Obayashi

WASHINGTON/TOKYO (Reuters) -The head of the U.S. Senate Banking Committee on Tuesday urged the White House to scrutinize the relationship between Nippon Steel and the Chinese steel industry, citing national security concerns amid bipartisan opposition in Congress to the Japanese company's $14.9 billion deal to acquire U.S. Steel Corp.

"As you examine this deal, I urge you to thoroughly investigate the allegations raised in this report and examine Nippon's ties to the Chinese government and the danger this merger poses to American national and economic security," Sherrod Brown said in a letter to Biden citing an April report by consultancy Horizon Advisory.

Nippon Steel said in a statement that Horizon's report was "rife with inaccuracies and misrepresentations" and that its operations in China were "very limited", representing less than 5% of its global production capacity.

The White House did not immediately comment. Horizon Advisory did not immediately respond to a request for comment.

Horizon's report said Nippon had a long-run history of supporting the establishment of China's steel industry and that it operated, in whole or in part, nine facilities in China and had active joint ventures with a range of Chinese state-backed steel champions.

"Nippon's connection to the Chinese steel ecosystem and industrial policy agenda has concerning implications regarding ties to China's military-civil fusion strategy and quest for global economic power," said Brown, a Democrat from Ohio who is running for another term in the Nov. 5 elections.

Nippon Steel said the entities in which it invests in China have no control over its operations or business decisions outside of China, and that its Chinese partners do not have any access to information about Nippon Steel’s operations, including about its R&D and engineering, outside of China.

The White House sees steel as critical to national security, and Biden said last month that U.S. Steel should remain domestically owned. His opponent in the Nov. 5 presidential election, former President Donald Trump, has promised to block the deal if he wins.

(Reporting by David Shepardson in Washington and Yuka Obayashi in Tokyo; Editing by John Geddie and Stephen Coates)