By John W. Miller And Josh Beckerman 

U.S. Steel Corp. said Tuesday its Canadian unit would apply for bankruptcy protection, as the 113-year-old steelmaker seeks to stop the bleeding after five straight years of losses.

The Pittsburgh-based firm, which faces challenges including high-cost mills, labor liabilities, and competition from imports, also said it was canceling over $800 million worth of expansion projects in Minnesota and Indiana.

U.S. Steel Canada is seeking a court order allowing it to operate while exploring restructuring alternatives. U.S. Steel Corp. has agreed to provide 185 million Canadian dollars ($168.5 million) of financing to support current operations through the end of 2015.

U.S. Steel said the Canadian business, which it has owned since buying Stelco Inc. for $1.1 billion in 2007, has posted an aggregate operating loss of about $2.4 billion in the last five years. U.S. Steel Canada represents about $1 billion of U.S. Steel Corp.'s consolidated employee-benefits liability as of June 30. The restructuring would allow U.S. Steel Canada "to pay its suppliers and employees and to continue to service its customers," said U.S. Steel Chief Executive Mario Longhi.

The Brazilian, who took over from John Surma a year ago, has vowed change, headlined by a program that would cut costs by $435 million in 2014, dubbed the "Carnegie Way", after steel baron Andrew Carnegie.

Despite a lack of public detail on the cost-cutting, and a 2013 loss of $1.7 billion, the company's stock price has more than doubled over the past 12 months.

U.S. Steel said Tuesday it would pull the plug on an expansion of an iron ore-pellet operation in Northern Minnesota, which would have boosted production there by 3.6 million tons a year to 9.6 million tons. In addition, U.S. Steel won't proceed with additional investments for its carbon-alloy facilities at its Gary Works plant in Indiana, which produce a substitute for industrial coke, which is typically made out of coal.

The company "considered its future raw materials needs for iron ore and coke, and found its current production capability sufficient." Both iron ore and coke are ingredients in making steel in blast furnaces, which U.S. Steel relies on, in contrast to so-called minimills, which make steel out of scrap metal.

Together, these two projects were estimated to cost over $800 million, and combined with the Canadian restructuring, the consequence of all three moves would be a noncash, pretax charge of between $550 million and $600 million, the company said.

Mr. Longhi, a veteran of aluminum maker Alcoa Inc. and minimill steelmaker Gerdau SA, has indicated he wants to move U.S. Steel away from the traditional model of blast-furnace steelmaking. Alternative iron and steelmaking technologies "are not affected by these decisions," the company said Tuesday.

In a statement, Mr. Longhi said retrenching would allow the company to spend more money on making lightweight steel for car makers, special steels for gas drillers, and other capital expenditures.

Mr. Longhi "is cutting his losses," said Charles Bradford of Bradford Research Inc. "And he's pivoting away from their old business model, but there are risks when you change so much, and it will be interesting to see what happens."

The company also said Tuesday that steel-market conditions in the U.S. have remained stable and its operations have performed well, which are expected to result in higher-than expected earnings, the company said.

Analysts expect earnings of around 90 cents a share in the third quarter. Shares were up 7.5% to $44.50 in recent after-hours trading.

Write to John W. Miller at john.miller@wsj.com and Josh Beckerman at josh.beckerman@wsj.com

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