Essar Steel Algoma Inc. is seeking regulatory approvals for a new $55-million alternative port facility, apparently prepared to pull the plug on its existing arrangements with Port of Algoma Inc.
Recently filed court documents disclose that the Sault steelmaker started looking into building a port of its own last August.
Early concepts included floating structures, fixed structures or a combination of both.
A prefeasibility investigation conducted for Algoma by a design and construction company concluded earlier this year that a fixed structure for docking ships and unloading raw material was feasible as an alternative to the existing Sault port, subject to securing necessary regulatory approvals.
In January, Algoma decided to proceed with design work and filed regulatory applications with Parks Canada and Fisheries and Oceans Canada, as well as Ontario's Ministry of Natural Resources and Forestry and Sault Ste. Marie Conservation Authority.
One year before it filed for insolvency protection in November 2015, the steel producer transferred control of its Sault port facilities to its ultimate parent company, Essar Global Fund Ltd.
That transaction leased the port facility for 50 years to Port of Algoma Inc., a company owned 99 per cent by Essar Global and one per cent by the City of Sault Ste. Marie.
But Ontario's Superior Court of Justice ruled that was unfairly prejudicial to the steel mill's trade creditors, employees, pensioners and retirees, granting Algoma the option of terminating the port transaction if it repays loans provided by GIP Primus LP, which provided much of the US$150-million term loan that allowed Port of Algoma to acquire Essar's port assets.
Court documents indicate that Algoma was asked by its term lenders and some senior secured noteholders to investigate alternatives to the existing port in case discussions don't result in a negotiated solution.
Earlier today, Algoma announced it had acquired the 55MW former Lake Superior Power Plant.“With this acquisition, and the potential for a further 71MW in sustainable power projects through the addition of a solar farm (50MW), a low pressure steam turbine (8 MW) in our steelmaking facility, and a top gas recovery turbine (13 MW) at our No. 7 blast furnace, Algoma is rapidly approaching near self-sufficiency in power generation,” Algoma CEO Kalyan Ghosh said.