NANTICOKE — Stelco, one of the top steel manufacturers in Canada with 2,200 employees between its Hamilton and Nanticoke locations, will be sold to US-based Cleveland-Cliffs Inc. (Cliffs) in a $3.4 billion deal (approximately $2.5 billion USD).
– Haldimand Press file photo
Stelco CEO Alan Kestenbaum commented in a press release, “I am proud of what we have accomplished over the past seven years, and the value we have generated.… We have revitalized Stelco and restored it to its iconic status in Canada. I know that Cliffs will continue to build upon the excellent work and life environment we have created for all of our employees and continue to be a reliable supplier to our valued customers, while maintaining Stelco’s stature and reputation in Canada and maintaining our Canadian national interests.”
Cliffs touts itself as the “largest flat-rolled steel producer in North America and the largest supplier of automotive-grade steel in the US,” according to their website.
The terms of the deal have Cliffs purchasing all issued and outstanding common shares of the iconic Canadian steel company for $70 each. That price breaks down to $60 cash and a 0.454 share of Cliffs common stock, a component Kestenbaum called an important driver in the deal: “I have strong belief and optimism in the North American steel market…. I intend to remain an investor in Cliffs for a long time to come as he and his team continue to build out their platform and business.”
The Stelco sale follows a momentous recent history in which Stelco re-emerged from creditor protection in 2017 under a Companies’ Creditors Arrangements Act (CCA) plan.
According to an archival provincial press release on the matter, that restructuring plan hinged upon the acquisition of the company by Bedrock Industries, which saw Stelco retain its name, secured those 2,200 jobs, and ensured that five underfunded pension plans remained intact with no cuts. Bedrock committed at the time to $430 million over 20 years toward the pensions, including a $160 million guarantee.
Part of the restructuring plan included the sale of some lands owned by Stelco surrounding the Nanticoke plant, which is the location of the divisive proposed development of said lands by Empire Communities. Following the initial sale of those lands, Stelco has attempted to block the conveyance of the lands to Landco, an independent, court-appointed board tasked with managing the lands in the best interest of Stelco’s retirees and stakeholders. The Ontario Court of Appeal recently rejected Stelco’s latest attempts to block the land transfer. Once the transfer is complete, Landco can transfer those lands to Empire Communities, completing the sales process and opening the land up for potential development.
While representatives of Stelco previously suggested to Haldimand Council that the company would leave the area if Council supported a Minister’s Zoning Order request to develop the lands, which has since been approved in a 5-2 vote, Cliffs appears to see a bright future in Nanticoke.
In a press release, Cliffs praised Nanticoke’s Lake Erie Works site as “the newest and lowest-cost integrated steelmaking facility in North America,” noting that the deal “expands Cliffs’ steelmaking footprint and doubles Cliffs’ exposure to the flat-rolled spot market, with cost advantages in raw materials, energy, healthcare, and currency.”
Cliffs CEO and President Lourenco Goncalves commended Kestenbaum and the team at Stelco for the “remarkable turnaround they executed at Stelco, turning what was an underperforming asset under previous ownership into a very cost-efficient and profit-oriented company.”
He called Stelco a company that “respects the union, treats their employees well, and leans into their cost advantages…. We look forward to proving that our ownership of Stelco will be a net benefit for Canada, the province of Ontario, and the cities of Nanticoke and Hamilton.”
He added the deal was done “the way it should be done, reaching a respectful agreement between the two parties that keeps national interests at the forefront and recognizes the importance of the workforce.”
The release indicates that Stelco will continue operations as a wholly owned subsidiary, “preserving the name and legacy of the business,” while announcing a three-year, $60-million investment for increasing steel production at both Canadian facilities, with a commitment to ensure the sites continue to operate in accordance with the United Nations’ sustainability targets.
