Stelco Inc. announced it will transfer all hot strip processing to its Lake Erie mill following that facility's recent capacity expansion.

The mill’s performance has continued to improve since completion of the extensive, $270-million modernization project in the fourth quarter of 2006. Mill output achieved record production of over 280,000 tons in March 2007. The company says that the substantial completion of the modernization program has increased the Lake Erie hot strip mill’s annual capacity to 3.7 million tons from 3.0 million tons.

"The employees at Lake Erie Steel are commended for their success in both completing this extensive project and ramping up production at an accelerated rate," said Rodney Mott, Stelco's President and CEO.

The expanded Lake Erie Steel capacity will allow Stelco to take the next step in its strategy to become a low-cost producer by shutting down the 56-inch hot strip mill at its Hamilton Steel operations. The Hamilton hot strip mill, which has been in operation since the 1940s, has gradually become a high-cost operation with limited support from the marketplace. Shifting orders to the modernized Lake Erie hot strip mill is expected to improve Stelco's overall efficiency, improve product quality and lower operating costs.

Implementation of this initiative will reduce the workforce at Hamilton Steel by more than 300 positions, primarily through reduction and displacement of employees working directly at the Hamilton hot strip mill, as well as the elimination of certain support services in maintenance, shops, and coil processing. The company says it is planning to achieve this reduction through a combination of retirements, layoffs and severance. "The Hamilton employees continue to work hard to improve productivity and reduce costs, but it is impossible to be competitive with obsolete equipment,” said Mott. “The decision to reduce rolling operations at Hamilton and to optimize Lake Erie is our best choice for ensuring Stelco's long term success".

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, which produce high quality value-added hot rolled, cold rolled, coated sheet and bar products.