Stelco Inc. has completed the major components of the operational restructuring that it commenced upon exiting from the CCAA process.

Stelco’s operational restructuring had three key components: productivity improvement initiatives and reduction in the labor force; reducing production costs through workflow improvement; and optimizing capital projects.

To complete this program, Stelco had to close certain production facilities for a period of time during the fourth quarter; fortunately, the shutdowns coincided with a softening in demand for steel. The closures enabled the company to successfully complete several strategic capital projects, including:

• The reline and upgrade of the Hamilton blast furnace to significantly increase throughput and extend the interval for the next furnace reline to 2018.
• The Phase II expansion of the Lake Erie hot strip mill, which is expected to increase throughput by 20% over previous levels.

With these two major projects now complete, Stelco does not anticipate any further significant mill outages in 2007.

As a net result of the initiatives, Stelco expects to report a loss before income taxes in the range of $120 to $140 million for the fourth quarter ending December 31, 2006. Fourth quarter results were also adversely impacted by lower demand in the automotive and steel service centre sectors, which contributed to a reduction in spot prices for steel and shipments during the quarter. In addition, higher costs were incurred due to increases in the cost of energy and certain raw materials.

"The economic outlook for 2007 appears positive and the demand for steel has improved markedly," stated Rodney Mott, Stelco’s President and CEO. The company noted that shipment and semi-finished steel production in January improved significantly over the respective monthly averages for the fourth quarter. January shipments were 309,000 tons and semi-finished steel production was 380,000 tons, which compares to fourth quarter monthly averages of 225,000 tons and 204,000 tons respectively. Spot prices have also improved for January as compared to the fourth quarter.

Mr. Mott added that, "With these steps of our operational restructuring program now complete, we have significantly enhanced our efficiency, reduced operating costs, and are poised to compete effectively in this improving economic environment."

The corporation expects to release its annual results in early March 2007.

Stelco is one of Canada's largest steel companies. It is focused on its two Ontario-based integrated steel businesses located in Hamilton and in Nanticoke that produce high quality value-added hot rolled, cold rolled, coated sheet and bar products.