By IAN ROSS
For those waving the flag about foreign owners buying up national industry icons, Algoma Steel president Denis Turcotte says the arrival of Essar Group Ltd. has meant sure-footed management with deep pockets, vast technical expertise and a long-term vision for growth.
As a former forestry executive with Tembec, Turcotte knows the cyclical nature of Canada’s primary industries and the harsh consequences of allowing factories to atrophy by not investing in new technology.
“The net effect (in Canada) is a psychology has settled in to just maintain what we have and accept dying a slow death,” says Turcotte. “But we believe the next 20 to 30 years is going to be a good time to be in steel.”
The Mumbai-based industrial conglomerate purchased the 106-year-old steel sheet and plate producer last year for $1.85 billion and there are big plans to ramp up production.
“The acquisition by Essar is exactly what we hoped it would be,” says Turcotte.
Essar has aggressive plans to boost steel production in the Sault from 2.5 million tonnes annually to 4.5 million, and has promised a $500 million investment over the next three to five years.
There’s capital spending plans to expand the steel shop capacity and Algoma is firing up a mothballed blast furnace to add an extra million tonnes annually of iron-making.
Last summer, a seven-person technical team arrived from India and managed to squeeze 12 per cent more production out of Algoma’s existing assets.
The company’s newly relined No. 7 blast furnace, has been posting production records each month since its October restart.
If not for shortages of raw material, January would have been another record.
Algoma’s 10-year-old Direct Strip Production Mill, their flagship rolling mill that began its life as a problem child, broke through the two-million-ton run rate last year. The company vows to push that to 2.5 million.
“As much as a stretch as that seemed to be a year ago, we’re well on your way,” says Turcotte.
A big chunk of that overall production jump will come from Essar’s other big acquisition across Lake Superior in Minnesota.
Essar is building a $1.6 billion steel plant in Nashwauk, Minnesota.
It will be the first single iron ore mine-to-steel mill facility in North America and the first-ever steelmaker on the Mesabi Iron Range. Minnesota Steel will annually produce 2.5 million tonnes of unfinished steel slabs. These slabs will be shipped to Algoma for finishing.
Well before the first slabs arrive, Algoma’s first priority is getting iron ore pellets.
As the ore body in Minnesota is opened up this spring, Essar is looking around the Great Lakes for a pellet plant with excess capacity to start processing ore to ship to Algoma’s furnaces.
The Minnesota mill will become a merchant iron facility with a stream of three products: iron ore, hot briquetted iron (used in electric steel furnaces) and slabs.
“We’ll sell one of three products to various outside plants, whatever we have surplus and whatever generates the most cash flow,” says Turcotte.
The corporate structure will also change. Algoma will be integrated into Essar Steel Americas, a regional corporate structure with its own CEO, CFO, and head of sales/marketing to oversee all products from iron ore through to plate and coil.
Making hot and cold-rolled sheet and plate will always be a staple at Algoma.
