Proposed Stelco sale to Bedrock filed with court, includes land sales to fund pensions

Stelco has officially asked to be sold to Bedrock Industries, a major milestone in a court-supervised restructuring of the company formerly known as U.S. Steel Canada.

The deal has been coming together for weeks in individual agreements between key players and Bedrock, but Friday's announcement indicates the biggest step forward toward the sale yet. The company officially filed a motion in court to ask for approval to move forward with Bedrock Industries.

Stelco public affairs director Trevor Harris called the agreement a step in the right direction, but said there's "a lot of work to be done." 

"Ontario welcomes this latest development in the effort to restructure Stelco as an important step toward saving 2,100 jobs, protecting pensions and supporting economic development in the Hamilton region while ensuring environmental protection," said the province's minister of finance, Charles Sousa, in a statement.

Key elements in the plan, according to the province, include:

• Operations continue at both the Hamilton and Lake Erie mills
• Retirees keep their pensions without reductions or interruption
• Retirees continue receiving benefits
• Environmental liability on the land is taken care of

The proposed deal has support, with some conditions, from the union representing steelworkers and pensioners in Lake Erie, Local 8782 and 8782(b). But that local still hasn't settled its concerns about pensions and benefits. 

Neither has Local 1005, which called the plan "smoke and mirrors."

"It's a very lean deal for us but who it's a good deal for is the province and U.S. Steel," said Local 1005 president Gary Howe.

Land trust for brownfield lands

One big part of the deal involves setting up a land trust for the brownfield contaminated lands next to Stelco's current operations in Hamilton. Under the proposed deal, Bedrock would pay the province about $80 million toward covering the costs of environmental cleanup on those lands, according to a source close to the file.

Then, the lands will be sold for development, ideally taking advantage of increased value due to interested buyers not having to take on the environmental liability for their cleanup.

The proceeds of that sale will go to fund pensions and benefits, according to the province.

The province plans to put $10 million toward getting the land trust off the ground, and then lend another $66 million toward making sure the benefits are covered even if it takes several years to get the land ready for sale.