Tariff-battered Algoma Steel has secured $500 million in loans from Ottawa and Queen’s Park.
The Sault Ste. Marie steel producer announced term sheets have been signed with the federal government to receive $400 million from the Government of Canada under the Large Enterprise Tariff Loan facility and $100 million in loan facilities from the provincial government.
The struggling company made the request for government support back in July.
A Sept. 29 news release from the company said these facilities provide “essential financial flexibility amid prolonged trade uncertainty” as Algoma makes the shift from serving its traditional U.S. customer base to a predominantly Canadian market.
“The ongoing imposition of a 50 per cent tariff on Canadian steel has closed the U.S. market to Canadian steelmakers,” said Algoma CEO Michael Garcia in the release.
“We require this liquidity support to withstand this unprecedented U.S. governmental action, and importantly, to continue our transformation for the future. Algoma is poised to be a critical contributor to our nation’s agenda of building a stronger, more competitive, and prosperous economy. We look forward to supplying Canadian steel — from right here in Sault Ste. Marie — to, as the Prime Minister (Mark Carney) has said, help protect our sovereignty, grow our industries, export our energy, and build one strong Canadian economy.”
More than 50 per cent of Algoma’s production of sheet and plate went to the U.S. market to service the automotive, energy, manufacturing and construction sectors.
The company said it intends to transition into supplying the Canadian shipbuilding, energy, defence industries, infrastructure and other “nation-building” projects.
“The government’s financial support underscores their recognition of Algoma’s critical role in Canada’s industrial base, and demonstrates their willingness to provide direct support for our company through this transition,” said Garcia.
U.S. tariffs have take a toll on the company, which posted a $110-million loss in its second quarter of this year.
Given market conditions, Algoma said in the release that it’s fast-tracking its electric arc furnace steelmaking complex into production. The company said U.S. tariffs have made continued operation of its traditional and historic blast furnaces and coke ovens unsustainable.
Algoma brought the first of two electric furnaces into production in July with plans to bring the second online by year’s end.
The company revealed the total cost of the entire furnace complex amounts to $987 million.
From now on, Algoma said it will focus production on as-rolled and heat-treated plate, along with select coil products predominantly for the Canadian market.
“By combining essential liquidity with targeted support for our transition to EAF steelmaking,” said Algoma CFO Rajat Marwah, “this support allows us to move forward with confidence — aligning operations with market realities, advancing the EAF strategy, and safeguarding Algoma’s future.”