Canada plays 'hardball' with Stelco

Industry Minister Tony Clement is demanding U.S. Steel restart the former Stelco or face a possible dismantling of its $1.9-billion takeover of the Canadian firm.

Clement has sent a "demand letter" to the Pittsburgh steel giant after determining that the shutdown of the Hamilton and Nanticoke plants violates promises it made under the Investment Canada Act. U.S. Steel has 10 days to respond to the letter, which Clement describes as "the first step in the enforcement process."

"Yeah, I'm playing hard ball," Clement told reporters yesterday. "But it's important that every company recognize that they have to live up to their obligations to the government of Canada and to the people of Canada."

U.S. Steel is reviewing the letter and will respond "in due course," said a company spokesperson.

If the firm refuses the request, Canada can pursue a number of remedies, including "unwinding the deal" that led to U.S. Steel's purchase of Stelco in 2007, or seeking court penalties of $10,000 a day, Clement said.