News

The brightest future for Stelco Inc. is to be sold as a whole to another steel maker, chief executive officer Rodney Mott says.

Selling off the steel company's two main assets in Hamilton and Nanticoke, Ont., separately would be “very difficult” without addressing the complex issues of how to carve out the pension plans, Mr. Mott told reporters after Stelco's annual meeting Wednesday in Toronto.

“The sale of the whole company to somebody who's in the steel business is what I prefer,” he said.

Stelco revealed last week that it has appointed an independent committee of directors and hired two investment firms to advise it on a strategic partnership or sale of the business.

A takeover of Stelco — almost certainly by an offshore buyer — would mean the end of Canadian ownership of the steel industry after the sale of Dofasco Inc. to Arcelor SA, which was later bought by Mittal Steel Co., the deal by Essar Global Ltd. of India to buy Algoma Steel Inc. and the frenzied auction for Ipsco Inc. that was won by Svenkst Stahl AB of Sweden.

Mr. Mott acknowledged Wednesday that he was caught off guard by how rapidly acquisitions have changed the face of the industry in Canada.

“I just never dreamed it would be this fast,” he said.

He made his comments Wednesday after announcing another asset selloff — in this case its stake in the Wabush iron ore mine in Labrador — and more to come as the steel maker continues a repair job that was not completed while it was operating for two years under the protection of the Companies' Creditors Arrangement Act (CCAA).

“It's a company that is being positioned right to be teamed up with somebody in the future,” Mr. Mott said of Stelco, which he has been running since it emerged from CCAA protection last year.

Since then, he has eliminated more than 1,000 jobs, announced plans to close an obsolete hot strip mill at the company's Hamilton works and revealed Wednesday that some other operations in Hamilton may be shut by the end of the year.

Other assets that are likely non-core are a bar mill in Hamilton, the sale of which could be announced within weeks, sources said.

In addition, Stelco owns 4,400 acres of land near the Lake Erie mill in Nanticoke.

“It's not making money. We're paying taxes,” he said.

Stelco's share of a coating operation in Hamilton called Baycoat Inc. is also not a core asset. Sources said the sale of the bar mill could be announced within weeks.

There is no buyer in sight yet for Stelco and no guarantee that it will be sold, Mr. Mott said.

“If you wanted to be new into the North American marketplace, Stelco's a good attractive option,” he said. “But it also fits on a synergy basis with many companies in North America.”

Russian steel makers OAO Severstal and Evraz Group SA are expected to show an interest, as are Jindal Steel of India and two Brazilian companies.