December 12, 2011 / 8:13 PM / 8 years ago

Canada settles long court case against U.S. Steel

OTTAWA (Reuters) - Canada and U.S. Steel Corp have settled a court case that started when Ottawa sought to fine the firm in 2009 for breaking job-protection promises made when it bought Canadian steelmaker Stelco, Industry Minister Christian Paradis said on Monday.

Under the terms of the settlement, U.S. Steel will operate both the Lake Erie and Hamilton plants until 2015. It has also agreed to spend a total of C$250 million ($243 million) in capital investment, C$50 million more than initially envisaged.

Last month, Canada’s top court confirmed the government had the right to fine U.S. Steel C$10,000 a day. Ottawa said the steelmaker’s decision to shut down two former Stelco plants violated promises it made about maintaining employment levels.

“The government and U.S. Steel have come to an agreement that ends the court proceedings,” Paradis told the House of Commons.

U.S. Steel bought Stelco in 2007 for $1.1 billion, and the decision to idle the facilities affected about 1,500 jobs. The company challenged Ottawa’s right to sue it, blaming weak demand for the shutdowns.

“When it comes to foreign investment, when a company makes an undertaking we will ensure it is respected,” said Paradis.

However, the United Steelworkers union, which represents a large number of U.S. Steel’s Canadian employees, said it was incensed by Ottawa’s move to drop the lawsuit.

“This is an outrage. U.S. Steel’s takeover of Stelco was all about commitments to jobs and production in Canada. The Harper Conservatives have become party to a foreign corporation breaking its legally binding commitments to Canadian families and communities,” said National Director Ken Neumann.

The USW has been waging its own battle against the company in light of the curtailments and job cuts. Last year, the company locked out 900 workers at its plant in Hamilton, after it failed to reach an agreement with the union on pension plans and retiree benefits.

A spokesman for the company was not immediately available for comment.

($1=$1.03 Canadian)

Reporting by David Ljunggren in Ottawa and Euan Rocha in Toronto; Editing by Rob Wilson

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