Jan. 26, 2006 — Stelco Inc. issued an information update on the Phase 2 upgrade of the Lake Erie hot strip mill, which is one of the critical capital investment programs identified in the company's 4-point strategy announced in July 2004.

New equipment associated with the current stage of the upgrade has been installed, is operational, and is performing extremely well. However, implementation of this stage of the upgrade process has taken longer than anticipated, primarily as a result of the complex task of integrating the related control software as part of the commissioning process. Despite the delays, the commissioning process is still expected to be completed by the end of the first quarter of 2006.

Stelco says that operation of the mill, which has been improving on a weekly basis, has now reached 80% of the anticipated production capacity that is expected to be achieved for this stage of the project.

The hot strip mill upgrade was undertaken in an effort to increase hot roll capacity, improve production quality, enable the company to close its obsolete 56-inch mill in Hamilton, and contribute to the company's financial performance by reducing costs. Stelco states that it is confident that the upgrade's strategic objectives will be achieved.

Stelco notes, however, that the installation and commissioning delays will have a short-term negative impact on the facility's overall production, the volume and mix of products shipped, and the company's revenue from sales. These items will impact the fourth quarter of 2005 and the first quarter of 2006.

Stelco Inc. is a large, diversified steel producer involved in major segments of the steel industry through its integrated steel business, minimills and manufactured products businesses.