A spurned suitor is back with a new offer for the former Stelco.

Ontario Steel Investments Limited, a unit of Essar Global, tabled an unsolicited binding offer for the Hamilton steelmaker Tuesday in an effort to get back into the bidding process after its first offer was rejected in June.

As with its earlier bid, the company said its goal is to merge U.S. Steel Canada and its Algoma plant in Sault Ste. Marie into a new Canadian steelmaker.

"We are very excited to put this bid forward for Stelco; it is another important step in advancing our vision of creating a true Canadian steel champion," Ontario Steel said in a news release. "(W)e believe we are uniquely positioned to bring Stelco out of the CCAA restructuring process and create a foundation for a strong, competitive and sustainable steel business in Hamilton and Lake Erie."

The offer includes assumption of $954 million of employer pension liabilities and a commitment to contribute $25 million a year toward employee health benefits. The total proposed purchase price was not disclosed.

Ontario's stake in the restructuring is huge — it is owed $150 million loaned to Stelco in 2006 to top up its pension plans. There is also millions of dollars in pension top-ups at stake if the company is liquidated. That's all in addition to environmental liabilities for the company's bayfront land.

Ontario Steel's promise to operate the plants in Hamilton and Nanticoke, to pay off the company's massive pension shortfall and to resume paying health benefits to retirees, have earned it the support of the United Steelworkers.

"For us, the pensions and benefits are a huge concern," said Local 1005 president Gary Howe. "Having another bid in the mix is a good development."

The new offer leaves two bidders vying for Stelco — the other is a New York investment fund called Bedrock Industries. Its bid is said to provide nothing for the pension funds. Sources have also said an unnamed German steel company is considering a bid.

McMaster University business professor Marvin Ryder is not entirely entranced by the Ontario Steel offer.

"They've ticked off all the boxes that are important to the union, but they are absolutely silent on how the debts of U.S. Steel Canada will be paid," he said. "Those debts are why we're in this process and any proposal has to address that."

Those debts include $2.2 billion in court-approved claims by U.S. Steel of Pittsburgh.

To get its bids back into consideration, Ontario Steel must convince the court-appointed monitors in both cases to recommend them as the best outcome for both companies, or to bring a motion to court asking for the bidding processes to be reopened.

A court motion may be the only way the company can get back in the bidding. In an email exchange, U.S. Steel Canada spokesperson Trevor Harris said the company's board of directors "is not considering any further proposals from Essar."

Ontario Steel describes itself as "a consortium of steel industry specialists, including the shareholders of Essar Global. It was established as an investment vehicle for the Ontario steel industry."

Ryder said he wants to know more about the company's financial backers before passing final judgment on the proposal.

"We need to know who the partners are and what financial strength they have," he said. "Essar just doesn't have deep pockets. They came to North America without a lot of cash."

Essar's earlier offers for Stelco and Algoma were spurned on fears it lacked the financial strength to close a deal. Algoma went on to select a New York investment fund, KPS Capital Partners, as its preferred bid.

KPS dropped its bids for both companies last month, citing failure to reach agreement with the province over pension funding and environmental liabilities.

Ontario Steel has struck a deal with union locals in Sault Ste. Marie to draft a framework agreement to buy Algoma and is making similar efforts in Hamilton.

"Ontario Steelworks remains in active discussions with the United Steelworkers union regarding its offer for Stelco, and we look forward to continuing discussions with the Province of Ontario to ensure the long term interests of the community and the environment are protected.

"OSI is focused on steelmaking, and that will be its aim with Stelco. OSI's objective will be to rehabilitate the full asset base, including evaluating the return of steelmaking in Hamilton."

University of Toronto steel expert Peter Warrian said there have been positive developments over the last three months — all of the major players in the bidding process favour merging the two companies and the Ontario government now sees it as an industrial policy issue rather than just a financial issue.

The province's change in view was captured in comments Premier Kathleen Wynne made in Sault Ste. Marie this week. She told The Sault Star newspaper a strong steel industry is important to the province.

"We are building so much in Ontario right now — $160 billion over 12 years — and there is a lot of steel in that build," she said in an interview.

"It is important to the province that we have access to that high quality Ontario steel at a price that builders can afford," she said. "We're committed to the steel industry."

A motion is to go to court in Toronto next Wednesday asking for the Algoma bidding process to be reopened. The same day the union hopes to bring a motion asking for the reinstatement of health benefits payments to retirees.