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COVID-19 uncertainty shuts big Algoma Steel construction site

Work temporarily halted on No. 2 ladle metallurgy facility
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Algoma Steel (Kenneth Armstrong/SooToday)

A key component of Algoma Steel's ongoing $300-million construction blitz has been temporarily halted because of uncertainty over COVID-19 regulations, the steelmaker said.

Brenda Stenta, Algoma's manager of communications and branding, told SooToday a decision was made Monday to stop work on the company's second ladle metallurgy furnace – a steel-refining facility that employs electromagnetic stirring to tweak chemistry and heat steel to the optimal temperature for casting.

The decision was communicated internally to employees.

Steelmaking and associated supply-chain businesses survived the Ontario government's crackdown last week on the province's construction sector, but the ladle metallurgy furnace project didn't.

"Steel manufacturing continues to be deemed an essential service, as are supply-chain businesses that provide support, products, supplies, systems, or services necessary for steel producers like Algoma Steel to operate," Stenta said.

"While we consider the No. 2 ladle metallurgy facility project a necessary operation for Algoma and vital to our long-term sustainability, based on the uncertainty of the regulation as it applies to our situation, we have decided to temporarily suspend the project."

"The deferral of this capital spending is also consistent with our goal to preserve cash liquidity in the near term as our business faces falling demand and prices."

"Efforts are underway to secure the No. 2 LMF asset and protect the equipment from the elements," Stenta said.

Michael McQuade, Algoma Steel's chief executive officer, talked about the new ladle metallurgy furnace last summer at the Sault Ste. Marie Chamber of Commerce's 130th anniversary luncheon.

"We currently only have one ladle-met furnace and it's become a significant bottleneck in our process," McQuade said.

"As we produce more advanced grades of steel, we need more advanced refining capacity and are unable to refine the advanced grades using our older traditional, chemical-refined facility."

"This new facility will deliver another 100,000 tons a year and greatly improve our ability to add more value-added grades," McQuade told chamber members.  

Stenta said this week's decision to halt construction will be revisited "as our business situation and/or other circumstances may dictate."

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