“We need to define a future for this company, where we are a stable, successful company — with a 50 per cent tariff.”
That’s what Algoma Steel CEO Michael Garcia had to say Sept. 29 following a $500-million loan announcement from the federal and provincial governments, as the Sault Ste. Marie steel plant looks to weather sky-high 50 per cent U.S. tariffs amid shifting market conditions.
The federal government’s Large Enterprise Tariff Loan Fund contributed $400 million with the province tacking on an additional $100 million under the same terms.
“The money's vitally important because, with the current state of the business, the 50 per cent tariff has basically taken our largest historical market and effectively closed it to us,” Garcia said.
“We need to pivot to a future where primarily we are thriving on a Canadian domestic steel market, and then understand other opportunities for export as well.”
Announced by Minister of Jobs and Families Patty Hajdu, the loan is meant to help Algoma Steel transition away from reliance on the U.S. market and to limit disruption to its workforce, while the federal government looks to ramp up Canadian steel use through investments in defence and prioritizing Canadian steel in domestic industries.
“If we really are going to meet this moment with the ambition that the prime minister talks about, we need the fundamentals of building, and the fundamentals of building is Canadian steel,” Hajdu said.
“We're prioritizing Canadian steel in construction through a renewed 'choose Canada' approach, and the federal procurement processes are changing rapidly to require companies that are contracting with federal procurement agencies ... to source steel from Canadian companies.”
As the only Canadian-owned and -operated steel mill, Algoma Steel has a “footprint in Canada like no other," Hajdu said.
“They are part of the Canadian landscape, and they form the foundation of the security of steel production that this country truly needs,” she said.
“We have to be certain that the company exists because, in fact, without it, we do not have a Canadian-owned Canadian manufacturer.”
Whether it’s pipelines, railways, bridges, or tunnels, prioritizing Canadian steel in domestic projects will result “in a very bright future for Algoma Steel,” Garcia said.
While these transitions are made, loans will help buy the Canadian steel industry some time.
“It takes time to take the costs out, to make the pivot, to reduce production. It takes time to understand what the future of the Canadian market is going to look like, and understand if we need to diversify our steelmaking,” Garcia said.
“More than anything, this loan by the government, this liquidity gives us the time to meet all of those challenges.”
Beyond domestic steel use, Hajdu said Algoma Steel’s transition to electric arc furnace production will serve as a selling point for new international markets.
“We have an opportunity here in Canada to be the supplier to a world that's looking for clean steel, and Algoma is well-positioned because of those early investments and that ambition,” she said.