Ontario Premier Doug Ford is willing to financially backstop Algoma Steel to diversify its product mix and go back into its decades-old catalogue of offerings.
Ford made frequent mention of the financially struggling Sault Ste. Marie sheet and plate producer during a funding announcement in Hamilton, Aug. 20. The province made a $70-million investment to expand training and upskilling for workers, in sectors like steel, who are impacted by U.S. tariffs.
During his speech and scrum with the media, Ford lamented the lack of a diverse range of Ontario-made steel products and how companies like Algoma can step up to fill the gap.
The 124-year-old Sault sheet and plate maker christened the start of the first of its twin $880-million electric arc furnaces in July, but Ford said he’s bothered that steel jobs in the Sault are being cut due to crippling U.S. tariffs against Canadian steel exports.
“We have to find them (Algoma) another product to produce,” said Ford, adding that his government was willing to fund new product lines in an effort to preserve steel industry jobs.
Ford has been going across the province promoting a made-in-Canada, made-in-Ontario domestic manufacturing movement by creating the economic conditions that invite investment.
“We’ve got to onshore every single thing possible that we have the capacity to do.”
With the government having invested $60 billion in construction on 50 hospital projects, Ford said there’s a lack of domestically produced structural steel, particularly I-beams.
His government is also on a mission to build North America's largest transit system, including 14 kilometres of Hamilton’s planned light rail line, which means rails.
“We don’t even make the steel rails here, but we’re gonna start,” Ford said.
“That’s a conversation we’ll be having with Algoma (Steel),” Ford said gesturing to Sault MPP Chris Scott, who was in attendance. “They can produce those.
“Maybe they can ramp up really, really quick," said Ford. "This is where the federal government — which will be supporting Algoma, I got that confirmed, and Ontario will be — to produce these rails, but also other things from steel beams and everything else you can possibly think of.”
Scott confirmed those plans are, indeed, in the works.
The Sault MPP, and parliamentary assistant to the energy and mines minister, said he’s attended two meetings involving Algoma Steel executives, the premier, Finance Minister Peter Bethlenfalvy, and Vic Fedeli, minister of economic development, job creation, and trade. The most recent was last Monday in Toronto.
Based on the vibe in the room, Scott said things are moving fairly quickly. Algoma’s situation is considered a “top priority, mission critical” item.
“There are three main things we’re after that we (Ontario and Algoma) don’t currently make: I-beams, rebar and rail. Sadly, 45 years ago, we did all of those things and more at Algoma Steel.”
Well into the 1970s and 1980s, Algoma produced a wide array of products, such as grinding balls, reinforcing rods, structural steel, seamless tubes, and rails.
Algoma began its existence in 1901 as a rail mill and thrived in that business until it stopped in the early 1990s after running into stiff domestic competition from a heavily government-subsidized Sydney Steel (Sysco) in Nova Scotia.
Sysco became a political football as part of a provincial and federal effort to prop up an ailing steel producer in an economically depressed area. It resulted in many rail orders from CN, CP, and even the Toronto Transit Commission, going to the Cape Breton mill.
Sysco went out of business and was liquidated in 2001, leaving Canada with no rail manufacturing capacity.
Scott said Algoma’s transition to electric arc steelmaking creates a business case to make those products and ensure Algoma’s longevity for the next 30 to 50 years.
The provincial government’s mandated purchase of Ontario steel in public infrastructure projects presents a “massive shot in the arm” for companies like Algoma, he said.
Scott said the opportunities discussed that seemed to excite Algoma CEO Michael Garcia are an expansion into I-beam manufacturing and the upgrades already made at the company’s plate mill. Algoma wants to take advantage of federal budget increases in defence spending to make armoured vehicles and naval vessels.
“For me, it’s all hands on deck to make that a reality in way that makes the most sense for Algoma," said Scott.
He likened the critical nature of such an undertaking to Ontario working with businesses during the pandemic to build up a provincial base of manufacturing in the scramble for masks and other personal protective equipment.
“Government doesn’t create jobs, but we create the conditions for those kinds of investments. It’s up to industry to be partners and leaders.”
The next step, Scott said, is to take its proposal to Ottawa.
The province is looking to quickly arrange a meeting with Prime Minister Mark Carney and Finance Minister François-Philippe Champagne to get federal buy-in and a potential funding partner on what will be a likely multi-billion-dollar endeavour.
In an email, Algoma Steel CEO Michael Garcia confirmed that the company is “actively engaged in discussions with the province regarding how our operations can support Canada’s future industrial needs.”
“I appreciate the premier’s recognition of Algoma’s role in the province’s economy and share his vision for a more resilient, self-sufficient Canadian steel sector.
“While no specific decisions have been made at this time, we are committed to working with all levels of government to assess opportunities.”
Algoma made a request to Ottawa in July for up to $600 million in loans to keep the company afloat.
Also critical to Algoma’s plan, Scott said, is to get moving on Sault Ste. Marie’s long-talked-about commercial port plans.
Opportunities do exist, Scott said, to ship Algoma's "green" electric arc furnace steel to the European market to tap into a half-trillion dollars committed to defence spending by the NATO countries there.
In recent months, Algoma Steel has spoken publicly about dramatically pivoting from its traditional U.S. customer base toward Canadian energy, defence, and shipbuilding applications.
Algoma appears well on its way to forging ties with the marine industry.
The company hosted a delegation this month from Irving Shipbuilding of Halifax and StigterStaal B.V., a Dutch supplier of shipbuilding steel, on a tour of its modernized plate mill, “followed by productive meetings.”
Ford has become an ardent supporter of Ontario shipbuilding. He went to bat yesterday for Hamilton’s Heddle Shipyards, now officially known as Ontario Shipyards.
Provincial ship builders are getting “crumbs,” he said, when it comes to being awarded federal contracts for naval vessels and icebreakers that are going to East Coast and Quebec yards in the national shipbuilding strategy.
With Ottawa increasing the national defence budget by five per cent to meet its NATO commitments, Ford said Ontario shipyards should be given a “slice of the pie.”
Algoma has partnered with Ontario Shipyards to be the primary supplier for Team Vigilance, a coalition aiming to build the next generation of Canadian naval vessels.
