A foreign steel maker that has previously purchased a Sault Ste. Marie steel plant is interested in U.S. Steel's Canadian operations, according to a report in the Hamilton Spectator.

Essar Steel Holdings, an India-based steel company, purchased Algoma Steel in 2007 for $1.85 billion. The company's name curiously appeared in bankruptcy court documents a month earlier as a party to be notified about the progress and proceedings.

But the news should be met with "cautious optimism" as a formal bid has yet to be announced, said Ward 4 Coun. and steel sub-committee member, Sam Merulla.

"That would be a dream come true for our city," Merulla added. "At this point it's speculative."

Industry analyst Chuck Bradford said the possibility of a new bidder could throw a wrench in U.S. Steel's plans to dump the liabilities of the Canadian plants.

"A lot of people thought that U.S. Steel would probably end up buying it out of the bankruptcy… without the pensioners and debt liability," Bradford said. "But other people have to also make bids, and there are some people who could bid for just a piece, and that could make the whole thing really messy."

"And Essar, or Algoma, we're not sure which one but they're really the same, sounds like they're interested in buying."

Essar spokesperson Brenda Stenta declined to comment on a possible bid.

Essar opening Minnesota iron ore mine in 2016

U.S. Steel bought the former Stelco site in 2007. Shortly after it was purchased, the Hamilton plant was idled, and fixed operating costs began to erode any chance of profit. The Canadian operation declared bankruptcy last September.

Essar steel last made headlines in 2013 when it asked the Ontario government for relief from its pension obligations in Sault St. Marie to help the company stay afloat. It was granted relief, and has a plan to fully fund the pension over 10 years.

Bradford said the move may also play into a Minnesota iron ore project, a $1.7-billion (USD) open-pit mine. Bradford said it was designed to feed the Algoma plant, but added that the Nanticoke and Hamilton plants could factor in, too.

It's why he believes Essar is a company that wants to make steel.

"I think they want to make steel," Bradford said. "You don't buy something for likely more than a billion dollars just to let it sit. And the facilities at Lake Erie works are the best on the lake, certainly it is the newest on the lake."

The Minnesota project is due to be completed in 2016, but how Hamilton factors into those plans, in a potential sale to Essar, are yet to be determined.

"Some of it, despite what the union says, really can't run," Bradford said. "The plant in Hamilton, for example, doesn't have a hot strip mill. And without a hot strip mill, you really can't make steel."

Hamilton's hot strip mill was hut down during the restructuring of the company by U.S. Steel, Bradford said.

"You'd have to sell a semi-finished product, and the only people who buy semi-finished are other steel companies," said Bradford. "And to build a new hot strip factory is a billion dollars."

Hamilton does have an advanced zinc coating process, one that is "very highly regarded by the automobile companies," Bradford added.