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Algoma Steel turns a profit as strike possibility looms

Sault Ste. Marie steel producer continues to reap the rewards of a booming steel market
Algoma Steel Platemaking
(Algoma Steel photo)

North American steel markets are booming for Algoma Steel, but the spectre of a strike by its largest union hangs over the Sault Ste. Marie steel producer.

The plate and sheet maker recorded a quarterly profit of $328.9 million during its fiscal first quarter, up from the $252.2 million posted during the same time in 2021. This was built on revenues of $934.1 million, an 18 per cent improvement over the $789.1 million generated in first quarter of last year.

The first quarter of Algoma’s 2023 fiscal year runs from April 1 to June 30.

The average price of steel was $1,632 per ton, up almost 38 per cent from the $1,185 per ton in the prior-year quarter.

Shipments for the first quarter were down almost 12 per cent to 537,524 tons, compared to 610,057 tons in the prior-year quarter.

The company attributes the results to increases in the price of steel, which was partially offset by an increase in the price of raw materials and consumables like iron ore, scrap, alloys and natural gas, as well as an increase in employee profit sharing.

Last month, Algoma cut a new labour deal with its office workers, but is finding tougher sledding with Steelworkers Local 2251. The contract expired at the end of July but the company and Steelworkers have agreed to a 15-day extension to talks.

Company CEO Michael Garcia commented that it “demonstrates the willingness and desire of both sides to reach a fair and equitable agreement.”

Potential work stoppages aside, Algoma said construction of its two electric arc furnaces (EAF) still remains on schedule. The $703-million project will radically change the way the 120-year-old company has made steel, from coal-fired production to cleaner and greener technology while increasing steel production in the process.

Construction kicked off last November. It will take two years to complete. Foundation and pilings work is underway. Building erection begins this fall. 

So far, $103 million has been spent on the EAF project. 

On this latest quarter and past 2022 fiscal year, Garcia stated Algoma’s momentum continues with another strong quarter in a “volatile operational environment.”

“This summer has been a busy time for Algoma,” said company CEO Michael Garcia in a statement.

"The construction of our transformative electric arc furnace project continues on budget and on time towards a targeted startup in 2024.

"At the same time, the first of our two-phase plate mill modernization project was completed and is ramping up during the third calendar quarter of this year. In July we significantly advanced our capital allocation program by repurchasing approximately 28 per cent of our outstanding shares. We continue our focus on disciplined execution during dynamic market conditions.

“We are operating the facilities normally while these talks continue and look forward to working together as we advance our collective strategy of becoming one of North America’s leading producers of green steel."