Steel Mills
Canada Steel Mills Reject Essar Global
Written by Sandy Williams
June 28, 2016
It appears that Essar Global has been eliminated from the bidders vying for the assets of US Steel Canada. The Hamilton Spectator is reporting that the USSC board of directors has rejected a bid from Essar Global because of concerns that the company lacks the financial resources to complete a purchase. Essar was rejected as a bidder by Essar Steel Algoma for the same reason.
US Steel Canada cannot comment on specific details on the sales process due to a non-disclosure agreement. USSC spokesperson Trevor Harris, however, confirmed that “certain parties previously involved are no longer involved in the sales and investor solicitation process, following a conclusion they would not be able to complete a qualified bid that could result in a going-concern solution.”
“This is a potentially devastating decision for thousands of workers, pensioners and the communities that are most affected by the restructuring of our steel industry,” said Marty Warren, USW Ontario Director in a press release on Monday.
“Essar Global has indicated it is more committed than other bidders to protect jobs, pensions and retiree benefits,” Warren said. “We’re calling on the provincial government to intervene immediately and to use every means at its disposal to stand up for the best interests of our working families, pensioners and communities.”
The remaining bidders are investment companies KPS Capital and Bedrock Industries.
KPS was chosen as the successful bidder by Essar Steel Algoma. The sale is contingent on working out a new contract with the union and gaining certain financial/ incentive support from the government.
The United Steelworkers’ preferred bidder was Essar Global. The USW unsuccessfully challenged the dismissal of Essar from the Algoma bidding process. The union perceived a better chance of getting the pension shortfall funded by Essar then by the other bidders.
“Essar Global has put forward a plan that is more aligned with the real needs of our members and our communities – jobs, pensions and retiree benefits,” said Bill Ferguson, President of USW Local 8782 in Nanticoke.
“As a key stakeholder in this process, it’s critical for the province to join us in fighting to reverse the decision to eliminate Essar Global from the bidding process. Our government has to step up and challenge this betrayal of thousands of families,” Ferguson said.
KPS said it will not take on the pension deficit but is offering annual payments to the Algoma fund as well as a profit sharing plan. KPS has confirmed that it hopes to acquire and merge USSC and Algoma.
Gary Howe, president of USW Local 1005 in Hamilton said the union would oppose any bid for US Steel Canada that doesn’t address jobs, pensions and health benefits for retirees.
“We are obviously not very happy with this development and will have strong feelings if that’s what happens,” Howe said. “We don’t think either one of them has any interest in picking up the pensions.”
The goal for USSC and for Algoma is to keep the mills operating as a going-concern. KPS appears willing to do so and has a history of resurrecting failing companies into healthy, independent entities. A compromise by the United Steelworkers and the successful buyer may be the lynch-pin that stops the disintegration of the two companies and delivers the promise of continued steel production in Canada.
Sandy Williams
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