Ontario Steel goes after US Steel Canada
A consortium led by Indian energy and resources conglomerate Essar Global, has submitted an offer to buy U.S. Steel Canada —formerly known as Stelco —, which has been operating under bankruptcy protection since 2014.
Ontario Steel Investments did not disclose the proposed purchase price, but said the offer includes the assumption of Cdn$954 million ($725 million) in liabilities under the U.S. Steel Canada’s pension plan and a commitment to provide Cdn$25 million toward post-employment benefits for the firm’s past and present staff.
U.S. Steel Canada, a former unit of United States Steel Corp., employs nearly 2,000 workers in Ontario and has the capability to produce 2.6 million tons of steel a year.
Ontario Steel Investments is also bidding for Essar Algoma in Sault Ste. Marie, and says it has plans to combine both companies. The company submitted the offer on Aug. 5.
Both offers would require an agreement with the United Steelworkers, which has current and retired members at both Ontario steel companies.
"Ontario Steelworks remains in active discussions with the United Steelworkers Union regarding its Offer for Stelco, and we look forward to continuing discussions with the Province of Ontario to ensure the long term interests of the community and the environment are protected," the company said in a statement.
U.S. Steel Canada, a former unit of United States Steel Corp (NYSE:X), employs nearly 2,000 workers in Ontario and has the capacity to produce 2.6 million tons of steel a year.
In a separate development, Pennsylvania-based U.S. Steel said it planned to sell 17 million new shares following a surge in its stock price as commodities prices are showing signs of stabilization.
Steelmakers in the US have recently benefitted from new tariffs on imports, which has helped reduce the presence of foreign steel by 19.8% this year to 14.2 million tonnes, according to Global Trade Information Services.
They have also been aided by expectations that China would move to trim overcapacity. However, recent reports suggest these capacity cuts have not been very successful, so the commodity could see a significant price correction.