The plant which will be phasing out its blast furnaces and replacing them with the newer furnaces at the Algoma Steel facility in Sault Ste. Marie, Ont., on March 25. The steel maker is delaying the start time for the new furnace.Fred Lum/The Globe and Mail
Algoma Steel Group Inc. ASTL-T chief executive Michael Garcia is appealing to Prime Minister Mark Carney to “immediately engage” with the Trump administration about dropping punishing tariffs on imports of Canadian steel.
Sault Ste. Marie, Ont.-based Algoma is under significant strain owing to the 25-per-cent tariffs on steel and aluminum imposed by U.S. President Donald Trump on March 12.
The Canadian steelmaker is directly bearing the costs of the tariffs because it is importer of record in the United States, and it has largely been unable to pass on the costs to its customers. The little under three weeks the company was subject to the tariffs during the first quarter cost it $10.5-million. The U.S. market accounts for about half of Algoma’s revenue.
Before the Liberals won a minority government this week, Mr. Carney, the party leader, met with Mr. Garcia during one of his final campaign stops at Sault Ste. Marie last Friday. The Algoma boss mapped out not only the damage the U.S. tariffs are inflicting on the company, but also the harm being inflicted by suspected foreign dumping into the Canadian steel market.
Algoma is the only producer of steel plate in Canada and the only independent primary steel producer left in the country. Looking west along Queen St. West towards the Algoma Steel plant in Sault Ste. Marie, Ont. on March 26.Fred Lum/The Globe and Mail
Algoma is the only producer of steel plate in Canada, but steel mills in Turkey, Taiwan, Italy, France and Korea dump product into the domestic market, according to Mr. Garcia.
He urged Mr. Carney in their meeting “to take action to protect the Canadian domestic steel market from unfair, foreign-traded steel.”
Steps that Mr. Garcia would like Mr. Carney to take include accelerating public infrastructure projects that drive demand for steel, and rolling out “Buy Canadian” requirements that mandate the use of Canadian steel for such projects.
Mr. Garcia also wants Mr. Carney to make good on his proposal to levy a carbon tax on foreign steel imports, similar to the industrial carbon tax that Algoma itself is subject to in Canada.
Mr. Carney last Friday said he intends to introduce a carbon border adjustment to ensure Canadian steelmakers are not undercut by imports from producers in jurisdictions with lower environmental standards.
“If foreign steel is being sold in Canada, and produced in a country with no carbon tax, which basically would be almost every country in the world, except a handful of countries in Europe, then that steel should be taxed on its carbon content as it crosses into Canada,” Mr. Garcia said.
Algoma is the only independent primary steel producer left in Canada. Dofasco and Stelco, which also have massive operations in Ontario, are owned by Luxembourg-based ArcelorMittal and U.S.-based Cleveland-Cliffs Inc., respectively.
In a news release after stock markets closed on Tuesday, Algoma reported a net loss of $24.5-million in the first quarter ended March 31, compared with a profit of $28-million during the same period last year.
The company said it is delaying by a few months the launch of its electric arc furnace (EAF) technology, which has been billed as a game changer.
Inside Algoma Steel’s massive project to go electric
The first EAF had been previously scheduled to start up in April, but the company now says it will miss that target. The EAF will instead start some time during the second quarter but will still meet its 2025 production goals.
During a conference call with analysts on Wednesday, Mr. Garcia said that more snow than usual this past winter and extreme cold hampered its plans for the EAF launch. He cited, in particular, the difficulty of starting a water treatment plant in below-zero temperatures.
The eventual phasing in of two EAFs over the next year and a half should see Algoma’s carbon emissions fall by more than 70 per cent, owing in large part to its decommissioning of a highly-polluting blast furnace. The EAFs will also lower Algoma’s costs and give it the ability to significantly boost its steel production. The total budget for the EAFs is $880-million, with most of that already spent.
Steam from the Algoma Steel plant in Sault Ste. Marie, Ont. rises in the cold morning air on March 26. Algoma cited "unusually harsh winter conditions,” for a delay in the start of its electric arc furnace technology.Fred Lum/The Globe and Mail
While Algoma’s overall steel shipments were down in the quarter, its plate business performed well, with shipments of 91,000 tonnes compared with 82,000 tonnes in the prior quarter. Management expressed optimism on the call that it can continue to grow the steel plate business in Canada.
Despite fierce competition from foreign producers, Algoma is confident it can add to its order book owing to anticipated strong demand from the Canadian defence, pipeline and maritime industries.