Algoma Steel to receive $500 million in support from the Canadian and Ontario governments

Canadian steel company Algoma Steel Group has agreed to raise C$500 million in liquidity to support its operations in Sault Ste. Marie, Ontario. The financing includes $400 million from the Canadian government under the Large Enterprise Tariff Loan Facility program and $100 million from the Ontario provincial government, according to a press release.

The company emphasized that these funds will provide the necessary flexibility amid trade uncertainty and accelerate the transformation of the business. Algoma CEO Michael Garcia thanked the governments for their support, noting that the 50% tariff on Canadian steel has effectively closed the US market. According to him, the assistance will allow the company to preserve jobs, continue investments, and provide Canada with its own steel.

The credit lines have a seven-year term and provide for an interest rate of CORRA +200 bps in the first three years, with a gradual increase thereafter. As part of the agreement, Algoma will issue 6.77 million warrants at a price of $11.08 per unit, which aligns the long-term interests of the government and the company.

At the same time, Algoma announced production changes. Due to tariffs, the operation of blast furnaces and coking facilities is becoming unprofitable, so the company will accelerate the transition to electric arc furnace (EAF) production. The total cost of this project is estimated at $987 million. Going forward, Algoma will focus on producing thick-gauge rolled products and certain types of coils for the Canadian market.

According to management, these steps will allow for the stable supply of products to domestic industries, from infrastructure and machine building to energy and defense. At the same time, they will support Canada’s strategy to create “green” steel and reduce CO2 emissions.

It should be recalled that in July this year, Canada tightened its tariff quota system for steel imports to soften the blow from US tariffs on its metallurgical industry. In addition, changes to public procurement rules and support for the industry’s transition to new business areas were envisaged.