The Canadian government said on Friday it had begun legal proceedings against industry giant US Steel to force the reopening of two Ontario factories it said were shut down illegally.
US Steel announced in March it would temporarily close the two facilities, which it acquired from Canadian rival Stelco.
US Steel said the closures were necessary because of declining demand in the steel sector, but the measure put 1,500 employees out of work and had angered the Canadian government.
In early May, Canadian Industry Minister Tony Clement sent the steel giant a letter calling on the firm to comply with the conditions attached to its purchase of the Stelco facilities.
“When US Steel acquired Stelco Inc in 2007, it committed to a series of undertakings regarding, among others, capital expenditures, research and development and production,” Clement said on Friday.
“I have carefully reviewed US Steel’s response to my letter. I remain of the view that US Steel is not complying with its undertakings, and I am not satisfied by its explanations for non-compliance,” he said.
“I am therefore announcing today that, on my instructions, an application has been filed with the Federal Court of Canada asking the Court to order appropriate measures to remedy this situation.”
When he sent US Steel the letter in May, Clement noted that a failure to comply with the terms of the purchase agreement would result in punitive action, including a possible fine of US$8,500 a day.