Chinese firm Zhuzhou says building Montreal's new Metro cars with steel wheels would save money. The STM has rejected that argument. ((CBC))

The Montreal Transit Corporation has officially rejected a bid by Chinese company Zhuzhou to build new cars for the city’s Metro system.

The corporation rejected the company’s proposal to build the cars with steel wheels, in favour of the rubber tires currently used by the Metro.

However, Zhuzhou isn’t ready to back down, said the Canadian consultant hired by the company.

The company is demanding a meeting with the province’s transport and finance ministers and is threatening to take its case before the courts.

Steel wheels would allow savings of up to 1.5 billion dollars, said Zhuzhou spokesman Glen Fisher.

The company could also respect the requirement of 60 per cent Canadian content by assembling the cars in the former Dominion Bridge plant in Lachine, said Fisher.

Spanish firm Construcciones Y Auxiliar De Ferrocarriles (CAF) has also expressed interest in bidding for the Metro car contract.

Controversial contract

The $3-billion contract to build new cars for Montreal’s Metro system has been controversial since the Quebec government announced it was awarding the contract to Quebec-based Bombardier in 2006 without launching a call for tenders.

That decision was contested by French company Alstom.

An Alstom-Bombardier consortium was the only bid submitted when the Montreal Transit Corporation (STM) finally launched the tendering process in 2008.

But, in December, Zhuzhou threatened legal action, complaining the STM did not adequately communicate the original call for tender.

In January, the STM announced it was increasing its order from 342 cars to a total of 765 cars with an option to order 288 more and put a stop to talks with Alstom-Bombardier. The corporation said the modification of the original call for tenders obliged it to issue a notice of intent giving other companies 30 days to signal their interest.

Zhuzhou and CAF are the only two other companies to have come forward.