Canadian steelmaker Lakeside Steel said on Wednesday it is taking actions to acquire former Hamilton, Ontario steelmaker Stelco, which is currently owned by US Steel.
Due to the global financial crisis, US Steel shut down most of its Canadian operations this spring, laying off 1,500 former Stelco employees. In consequence, the Ottawa government has sued US Steel for faulting on its commitments.
As a result of the lawsuit, the alternative of selling off US Steel's Canadian operations back to Canadian interests has emerged, and on Wednesday, Welland, Ontario-based steelmaker Lakeside Steel announced its filing of a motion with the Federal Court of Canada to obtain "intervener status" in the application filed on behalf of the Minister of Industry under the Investment Canada Act against US Steel. A sale of US Steel Canada is a remedy available to the Federal Court under the Investment Canada Act. If the Federal Court of Canada grants this course of action, Lakeside would agree to buy US Steel Canada and would comply with US Steel's commitments on production and employment.
"The Lakeside alternative being proposed to the court would repatriate a former Canadian icon and resume operations immediately at the Hamilton and Nanticoke facilities," said Vic Alboini, chairman and chief executive of Lakeside. He added, "We believe this is a viable business solution to address the difficult reality at US Steel Canada."
Since the initial mill shutdowns, US Steel has recalled 800 workers to its Hamilton mill; however, the friction is far from over, as yesterday the United Steelworkers union (USW) said that US Steel denied entry to 150 workers at its facility in Nanticoke, Ontario after the company and the Nanticoke workers failed to reach a labor agreement that would have replaced a contract that expired August 1.
"We see this action by US Steel as a clear violation of its written undertakings to maintain employment and production levels under Investment Canada Act," Tony DePaulo, a USW spokesman, said Wednesday. "We are calling on [Canadian Minister of Industry Tony Clement] to urgently expedite the government's request to the Federal Court of Canada to order US Steel to resume steel production and put its employees back to work," he added.
Back in 2005, Lakeside acquired Stelco's steel pipe and tubular division, a year after Stelco filed for bankruptcy protection from creditors, and still owns it.
The bidding price is unknown, but US Steel paid about $1.2 billion and assumed about $800 million in debt for Stelco in the fall of 2007. At the time the Hamilton company had annual revenues of about $2.4 billion.
Lakeside, based in Welland, Ont., makes steel pipe and tubing for the oil and gas, mining, automotive and commercial and industries.