Canada takes U.S. Steel to court over Stelco cuts

Fri Jul 17, 2009 5:32pm EDT
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By Randall Palmer

OTTAWA (Reuters) - The Canadian government took U.S. Steel Corp to court on Friday over production cutbacks at its Stelco subsidiary, Industry Minister Tony Clement announced.

Clement had sent U.S. Steel a "demand letter" on May 5 asking the company to comply with commitments it made when it took over Hamilton, Ontario-based Stelco. He said on Friday he was persuaded that U.S. Steel was still not complying with those undertakings.

An application has been filed with the Federal Court of Canada asking the company to "order appropriate measures to remedy this situation," Clement said in a statement.

He told Reuters afterwards: "I am requesting that the court mandate that U.S. Steel meet its obligations and that it be fined for every day that it does not." He said the fine could be up to C$10,000 ($8,900) a day.

In March, U.S. Steel temporarily shut down most of its operations at two big former Stelco plants in Hamilton and Nanticoke, Ontario, affecting some 1,500 jobs. It blamed adverse market conditions. A spokeswoman said on Friday that as a matter of policy the company would not comment on whether any of the facilities had been restarted.

Clement said in the statement he expected U.S. Steel to stick to the undertakings it had given at the time of its Stelco takeover on capital expenditures, research and development and production.

"I have carefully reviewed U.S. Steel's response to my letter. I remain of the view that U.S. Steel is not complying with its undertakings, and I am not satisfied by its explanations for noncompliance," he said.

U.S. Steel complained on Friday, however, that Clement had declined to meet the company to discuss the issue.   Continued...