Essar Algoma Steel is being sued by a Pennsylvania coke supplier for alleged breach of contract, claiming the Sault Ste. Marie steel maker backed out of a $32.5 million contract.
Transcor Coke, LLC and its Swiss parent company Transcor Ag filed Oct. 17 in a Pennsylvania Western District Court.
Transcor claims Essar signed an agreement in July for 40,000 metric tonnes of Polish coke to be delivered by vessel in October to the Sault plant. Essar advised Transcor the deal would not be honoured because of what Essar claimed were quality issues. Transcor argues the material met all standards.
Made from coal, coke is used with limestone in a blast furnace to smelt iron ore to produce molten iron.
The news comes on the heels of the company's decision to shut down a blast furnace it had just brought online in August and curtailing production on another.
The order book for flat steel products suddenly dried up this fall because of the economic upheaval in global markets. The company sells hot and cold rolled sheet and plate, primarily to the auto industry.
With labour leaders and the community bracing for layoffs, especially among the new hires to its 3,500-employee workforce, company spokeswoman Brenda Stenta said no reductions have been announced and the company was assessing the impact of the reduced operating levels and were developing a plan to address it.
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