[omro]

Ottawa may demand U.S. Steel sell Stelco

Clement warns company to honour its pledge to keep production here
May 07, 2009 04:30 AM
Comments on this story (1)
Les Whittington
Ottawa Bureau

OTTAWA–Industry Minister Tony Clement is warning United States Steel Corp. that Ottawa may take legal action against the company over its temporary layoff of Canadian workers.

U.S. Steel must live up to the commitments on production and other business dealings it made when the federal government allowed it to take over Stelco Inc. in 2007, Clement said in a letter to the company yesterday.

In March, U.S. Steel said it was temporarily shutting down most of its production at two large former Stelco operations in Ontario – in Hamilton and Nanticoke – which has left the future of 1,500 employees up in the air.

"I am concerned by the actions of U.S. Steel in cutting operations in Canada and by the impact this will have on its workers, Clement said in the so-called "demand" letter, which is the first step in the enforcement process under the Investment Canada Act that governs foreign acquisitions of Canadian corporations.

"While I recognize that these are challenging economic times, we expect the company to live up to its commitments."

"Yeah, I'm playing hardball," Clement told reporters later. But "they made a choice, they decided to invest in Canada and they decided to purchase those operations in Hamilton, and if you make that choice, you have to live with that choice."

Asked if the U.S. company might be giving priority to production in its American plants, Clement said, "Well, they're still producing steel. They are still in business. They're just not in business in Canada right now despite the contractual undertakings that they signed with the government of Canada."

He said an extra $12 billion in infrastructure projects are being planned in Canada this year. "Those projects are going to need steel, and so I think it's an obvious thing for them to be in business in Canada."

Clement said the government could go as far as trying to nullify U.S. Steel's takeover or asking a court to levy fines on the American steelmaker.

"We have a number of options that are available to us, including unwinding the deal, seeking court penalties of $10,000 per day and seeking a court ruling that would force a rectification of the situation to the deal that was signed," he said.

"What I'm signalling to you is I take these agreements seriously. When you have signed a deal with the Canadian government to invest in Canada, we expect you to honour the deal."

Courtney Boone, U.S. Steel's manager of public affairs, said, "We are reviewing the demand (letter) and will respond in due course."