Stelco Inc. commented on action taken on Thursday by General Motors Corp. regarding its supply arrangements with Stelco's Lake Erie facility. Stelco has received a letter from General Motors and has been served with Motion materials seeking the Court's permission to terminate General Motors' supply arrangements with Stelco's Lake Erie facility effective July 31, 2004.

General Motors cited Stelco's inability to provide certainty of supply beyond the July 31, 2004 expiry of the collective agreement at Stelco's Lake Erie facility plus the extended lead time needed to secure steel from alternative sources as the reasons underlying this action.

In its letter, General Motors indicated that it would be prepared to consider alternative arrangements to the termination of its business with the Lake Erie facility if those arrangements are in place by June 14, 2004. General Motors would consider continuing the business relationship if it could be assured of at least 90 days prior written notice of any potential work stoppage associated with the expiry of the Lake Erie collective agreement.

Courtney Pratt, President and CEO of Stelco, said, "This is an extremely serious development, but it is a possibility we have raised in public for months. We've stated the need to provide our customers with certainty of supply during our restructuring process. We've urged representatives of all three of our USWA Locals to engage in meaningful discussions about how to address their issues while providing customers with the certainty they demand. And we've indicated our willingness to consider the appointment of a neutral third party as a means of achieving progress on Lake Erie issues without presenting customers with the prospect of a strike.

"We've held meetings with Lake Erie USWA Local representatives in search of progress in satisfying General Motors' needs. Unfortunately, we've not been successful thus far.

"General Motors is offering a means of maintaining our business relationship — the provision of 90 days prior written notice of any potential work stoppage. We've asked the Lake Erie USWA Local to agree to that request and we hope that it will. A great deal is riding on that decision."

Stelco Inc. is a large, diversified steel producer involved in all major segments of the steel industry through its integrated steel business, minimills, and manufactured products businesses. Consolidated net sales in 2003 were $2.7 billion.