City must lead to raise steel industry profile

It's time city council get involved and help raise the profile of Canada's steel industry, says Ward 1 Coun. Steve Butland.

Now viewing the third restructuring effort since first getting into politics, Butland urges city council to lead an initiative that would raise the steel industry and help the Sault Ste. Marie steelmaker in its restructuring process.

Sault MP Terry Sheehan has met with the Ministry of Finance and Prime Minister Justin Trudeau to talk about the importance of steel – to the country and to the Sault Ste. Marie riding.

MPP David Orazietti has recently held a press conference launching a petition to save the steel industry.

The Sault Ste. Marie Economic Development Corp., the Steelworker's Union, the retiree groups, the Canadian Association of Steel Producers and other stakeholders including Tenaris Tubes, are also working behind the scenes to raise concerns and help turn around the industry.

Now is the time for city council to do the same, he said.

“We need to speak as once voice to raise the profile. This is the first time this council has raised the issue of Essar after four months. We need more engagement,” he said.

Butland suggested that council meet as a Committee of the Whole – a format that better allows for freer conversation and less meeting format binding rules – and invite the other stakeholders to hear from them.

In past restructuring, a major united front was created to lobby the governments for assistance and put the issue to the forefront.

Butland also suggested that Mayor Christian Provenzano lead a delegation to Ottawa and meet with various ministers there to be heard.

He's hoping that something will be presented to city council at its next meeting.

In the meantime, the Corporation of the City of Sault Ste. Marie has retained legal council to represent and protect the municipality during Essar Steel Algoma's restructuring.

The city, a secured creditor, is owned approximately $14 million in property taxes for 2014-15. The steelmaker also owes about another $1 million to the PUC for water and sewer but that will be dealt with under a separate claim, council was told.

The city has retained Aird & Berlis LLP to represent its interests, but those interests are more than about getting the property money, said assistant city solicitor Melanie Borowicz-Sibenik.

It's also about ensuring that if others make suggestions or recommendations that would have adverse effects on the city, the city can be part of the proceedings and refute those claims and communicate the city's proceedings.

The law firm is currently preparing the city's proof of claim and monitoring the proceedings and providing status updates.

It's estimated the total costs for the process can reach $175,000 if a more active role is required during the proceedings.

But CAO Al Horsman said that it's the city's intent to stay within a $50,000 budget as long as major issues do not arise.

The money will come from the city's contingency reserve fund, which currently sits at about $1.8 million.

Borowicz-Sibenik said the $175,000 is a the “full upset limit” that would only be reached if the city had to vigorously defend its position.

She told council that there are “multiple creditors” in the restructuring case that has already resulted in a number of complicated motions presented to the courts.

“We don't anticipate that we need this much money unless we will need to respond to the motions that are presented,” she said.

Essar Steel Algoma has already requested an extension of the stay order to March 15 and further requests can be made to the courts, she said.

The Corporation of the City of Sault Ste. Marie is considered a priority creditor, meaning it is at the top of the list to get the money it is owed from the steelmaker.

Ward 6 Coun. Ross Romano, a lawyer, questioned why a Toronto-based law firm was chosen to represent the city when able-bodied lawyers are available in the Sault and perhaps, could cost the city less money.

Borowicz-Sibenik said 20 past vendors were considered and evaluated and a top six lawyers with experience were considered. No local firms reached the top six, she admitted.

Romano said local lawyers have the experience and understanding of the city's economic situation and should have had the opportunity to bid for the jobs.

“We have local talent here and we should look at keeping our money local,” he said.

Essar Steel Algoma entered into CCAA protection late last year. It's expected to have completed a restructuring process by the end of August.