TORONTO — The United Steelworkers union might look to gain seats on the board of Essar Steel Algoma Inc. should India’s Essar Group decide to take its North American operations public, a union official told AMM.
The USW "years ago" bargained to have the option to name three members to the board of the Sault Ste. Marie, Ontario, steelmaker, union area coordinator Jack Ostroski said. But when the company was taken private, the USW "saw it better legally not to have members" on the board.
"If they went public again, we’d probably put our members back on," Ostroski told AMM. He said that would most likely be the only major impact on the union of any initial public offering (IPO).
Talk of an IPO for Essar’s North American operations—Essar Steel Algoma Inc. and Essar Steel Minnesota LLC—was reported late last month by The Times of India, which cited anonymous sources familiar with the matter.
Ostroski speculated that Essar might be looking to finance its operations in Minnesota. "They’re trying to raise capital or they’re trying to pay down debt. Those are the two reasons (for an IPO). With the Minnesota mill coming online, I would assume that’s where most of the debt is," he said.
The company declined to either confirm or deny rumors of an IPO. "As is prudent, we regularly evaluate strategic options for the business. Comment at this time would be purely speculative," an Essar Steel Algoma spokesman told AMM in an e-mail.
Mumbai-based Essar Global Ltd. in 2007 reached a $1.7-billion deal to acquire Algoma Steel Inc. of Sault Ste. Marie, Ontario, and another deal to acquire the assets of Minnesota Steel Industries LLC, St. Paul, Minn. (AMM, May 31, 2007).
Essar Steel Minnesota is planning to build an open-pit taconite mine, a concentrator and a pellet plant in Nashwauk that are scheduled to come online by the end of 2012.
Plans call for the pellet plant to have a production capacity of some 7 million tonnes per year, a portion of which will go to supply sister company Essar Steel Algoma. Essar Steel Algoma is expected to sell its surplus ore on the open market in North America (AMM, June 9).