The Ontario government is meeting this afternoon with a potential bidder for the former Stelco plants in Hamilton and Nanticoke in a move to protect taxpayers from hundreds of millions of dollars in pension plan shortfalls.

Sources confirm the meeting with an unnamed bidder for the U.S. Steel Canada operations has expressed interest in resuming steelmaking operations in Hamilton.

That's a critical factor for the Ontario government. If the former Stelco plants remain in operation, producing revenue and profits, Queen's Park will be saved from having to rescue 14,000 local pensioners who face sharp cuts to their retirement income if the company goes out of business.

Sources familiar with the situation, who asked for anonymity because they are not authorized to speak publicly, said the meeting is to discuss a number of issues around the sale of USSC assets, including how the badly under-funded pension plans will be handled.

One idea to be discussed is appointing an interim manager for the plan until USSC's restructuring under court-supervised creditor protection is complete. Other sources say the discussion is around management of the pension funds after a sale of the assets.

Tuesday's meeting is ahead of a gathering of unionized Stelco/USSC retirees slated for Wednesday to decide if workers should negotiate a pension settlement with the company.

Gary Howe, president of Local 1005 of the United Steelworkers union, said the security of the pension plans remains the union's top priority in USSC's restructuring.

"The big question for us right now is that the province hasn't committed to anything," he said. "Our priorities are still jobs, the pension plans and the OPEBs (other post-employment benefits)."

Watch thespec.com for updates.