Steelmaker and iron-ore miner, Cleveland-Cliffs Inc. has expressed its readiness to purchase assets left behind by United States Steel Corp. (US Steel) if the Biden administration blocks its proposed $14.9-billion deal with Nippon Steel Corp. The announcement comes as US Steel revealed plans to shift away from its blast furnaces unless it receives a $2.7 billion investment in Pennsylvania and Indiana facilities from Nippon Steel.

In a statement made on Thursday, Cleveland-Cliffs CEO, Lourenco Goncalves, affirmed the company's intention to "immediately acquire and invest" in any union-represented assets that US Steel shuts down. Supported by the backing of the United Steelworkers union and a bank group led by JPMorgan Chase & Co. and Wells Fargo & Co., Cleveland-Cliffs is prepared to step in and ensure that these assets remain operational.

Goncalves also commended President Biden's decision to halt the deal on national security grounds and criticized US Steel for its actions. He described US Steel's threats of shutting down integrated steelmaking production, terminating union workers' employment, and relocating its headquarters from Pittsburgh as a "pathetic blackmail attempt" on the US government and the Commonwealth of Pennsylvania.

The news of the proposed deal's potential blockage had a significant impact on US Steel's stock value, causing it to drop more than 17% on Wednesday. Although the stock made a partial recovery on Thursday, closing at $29.97, it still remained 16% below its pre-news level of $35.60. Jefferies, a financial services company, maintained a Buy rating on US Steel but lowered its price target from $47 to $41.

Despite the decline in stock value, US Steel's credit rating remains stable, according to Evan Mann, a senior high yield analyst at corporate bond research firm Gimme Credit. Mann stated that while the news disappointed US Steel shareholders, it had little impact on the company's bond yields. Gimme Credit maintained a Stable credit rating for the company.

Mann also noted the potential for joint-venture investments between US Steel and Nippon on certain assets. Additionally, he mentioned US Steel CEO David Burritt's comments about closing older, less efficient mills and the potential relocation of the company's headquarters. Mann expressed uncertainty regarding the veracity of these claims, speculating whether they were genuine or aimed at gaining political support.

Looking ahead, US Steel could face challenges amid the current economic slowdown, although it may benefit from future developments such as a new mini-mill, galvanized and electric steel lines, and a flat-rolled pellet facility. The fate of the Nippon deal remains uncertain, pending the decision of the Biden administration, while Cleveland-Cliffs stands prepared to step in and secure the viable future of US Steel's assets.