U.S. Steel sues Canadian company over refusal to honor multimillion-dollar contract

U.S. Steel on Tuesday sued a Canadian steel company alleging that it is refusing to pay for millions of tons of iron ore pellets it agreed to purchase five years ago because of new Trump administration tariffs.

Algoma Steel Inc., based in Sault Ste. Marie, Ontario, is accused of breach of contract.

A message left with Algoma late Tuesday was not returned.

According to the complaint, filed in federal court in Pittsburgh, U.S. Steel and Algoma entered into a contract in May 2020 calling for Algoma to buy millions of tons of iron ore pellets — mined and processed by U.S. Steel facilities in Minnesota — for negotiated rates.

The contract, the lawsuit said, runs through January 2027 and is governed by Pennsylvania law. It requires that all disputes be decided through arbitration proceedings in Pittsburgh.

“Now Algoma has buyer’s remorse and wants out of the deal,” the lawsuit said. “It has repudiated the contract by refusing the latest shipment of iron ore pellets and has affirmatively told U. S. Steel that it will not accept any more iron ore pellets or otherwise honor the parties’ contract.

“A deal is a deal.”

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The complaint alleges that Algoma already owes U.S. Steel more than $22 million, and that losses for U.S. Steel on the contract could approach $100 million.

Further, U.S. Steel said that Algoma has said it will not consent to arbitration in Pittsburgh. Instead, the company has told U.S. Steel it plans to seek relief in a Canadian court and will ask for a declaration finding the parties’ contract is no longer binding.

In late September, the lawsuit said that Algoma refused a shipment of the iron ore pellets. Then, on Sept. 29, the company wrote a letter to U.S. Steel in which it blamed the Trump administration’s tariffs on Canadian steel “for creating a situation where Algoma’s blast furnace steel, created using iron ore pellets, was no longer competitive in the American market.”

The lawsuit alleges that Algoma has no legitimate basis to unilaterally end the contract.

“A contract is a contract, and we expect Algoma Steel to live up to its commitments as have we,” said Andrew Fulton, a spokesman for U.S. Steel.

Trump announced a doubling of tariffs for all countries except the United Kingdom at a rally in Pittsburgh in May. It took effect a week later.

On Tuesday, Canadian Prime Minister Mark Carney visited the White House to talk about U.S. tariffs on steel, automobiles and other good.