UPDATE 2-U.S. Steel to permanently shut Ontario mill

Tuesday, 29 Oct 2013 | 5:10 PM ET

(Adds details on settlement with government, job impact, closing share price)

TORONTO, Oct 29 (Reuters) - United States Steel Corp said on Tuesday it will permanently shut down iron and steelmaking operations at its Hamilton, Ontario, mill at the end of this year.

The integrated mill was idled in 2010, but the steelmaker had not ruled out restarting production if the market improved. Coke-making and steel finishing operations in Hamilton will not be affected, said U.S. Steel spokeswoman Courtney Boone.

The company's mills in Hamilton and Nanticoke, Ontario, were the subject of a legal dispute between U.S. Steel and the Canadian government over job-protection promises made when U.S. Steel bought Canadian steelmaker Stelco in 2007.

When the conflict was settled in 2011, a Canadian minister said U.S. Steel had agreed to operate both plants until 2015.

"We are in compliance with our agreement with the Government of Canada," said Boone, who declined to comment further.

Chief Executive Mario Longhi said the Hamilton closure would reduce costs by about $50 million a year, and allow it to shut down two aging coke batteries at its Gary Works in Indiana. The company will also let some iron ore supply contracts expire in 2013 and 2014.

In Hamilton, 47 nonunionized employees will be affected, Boone said, but the move does not affect any unionized workers. At Gary Works, 120 employees will be reassigned.

U.S. Steel will take a noncash charge of about $225 million in the fourth quarter because of the closure, Longhi said.

Shares jumped on the news, closing up 8.8 percent at $25.47 on the New York Stock Exchange.

(Reporting by Allison Martell and Euan Rocha in Toronto and Nicole Mordant in Vancouver; editing by Janet Guttsman and Matthew Lewis)