Posted April 09, 2020 11:50:00A new Chinese bid for the $200 billion ($100bn to be precise) of the US steel industry has raised concerns from many quarters.
The Steel Corporation of America (SCA) has come under pressure to provide more details about the investment plans.
SCA chairman and CEO Bob Ginnett is set to address investors on Thursday and is expected to say the company is still in discussions with China, but said on Thursday the company would not commit to a specific date.
“The Steel Reserve is in no position to make an investment decision based on the specifics of the Chinese government’s proposal,” Ginnet said in a statement to investors.
“We will be looking at all the options available to us to support our business and our shareholders.”
The Steel Corporation has also been criticized for not being transparent about the plan.
The SCA is a joint venture between China National Petroleum Corporation (CNPC) and a consortium of Chinese steel companies including Steel Mountain, Steel Group and Shugetow.
Despite its history of corruption, the Chinese steel industry is now China’s third-largest private sector export market after cars and construction equipment.
China also owns almost a quarter of the world’s steel.
Chinese President Xi Jinping has been accused of taking China’s steel industry for granted and has overseen a string of decrees to tighten controls on the industry.
The SCA’s recent history of political influence, which has included its own involvement in the recent elections, has sparked concern about a potential future takeover by the Chinese state.
But SCA CEO Ginnets comments are unlikely to help ease fears the company may not have the capacity to take the risk.
According to the US State Department, the SCA and CNPC hold roughly $1.5tn in assets, with about $300m in China and $200 million in other countries.
China has said it plans to spend $1tn over the next decade to build a steel network stretching from Shanghai to the southern tip of South Korea.
A $1bn investment in the SCAs steel reserve is not in our long-term future, SCA Chairman Bob Gittett told investors.
This is not the first time China has raised a bid for an American steel company.
In 2015, the US company Steel Corporation announced it would seek to buy the SC A and the US$300m investment from the SCC was the first large-scale attempt to acquire a US company.
Since then, US President Donald Trump has promised to bring steel back to the United States.
Steel is a key component of many of America’s economic and political growth strategies.
The steel industry, along with coal, coal-fired power plants, and a range of other technologies, have been key drivers of the countrys economic recovery and growth.