Algoma Steel
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Algoma Steel Inc. (formerly The Algoma Steel Corporation, Limited; Essar Steel Algoma) is an integrated primary steel producer located on the St. Marys River in
Sault Ste. Marie, Ontario Sault Ste. Marie ( ) is a city in northern Ontario, Canada, on the north shore of the St. Mary's River directly across from its "twin city," Sault Ste. Marie, in the state of Michigan. The city's population was 72,051 at the 2021 census, makin ...
, Canada. Algoma Steel was founded in 1901 by
Francis Clergue Francis Hector Clergue (August 28, 1856 – January 19, 1939) was an American businessman who became the leading industrialist of Sault Ste. Marie, Ontario, Canada, at the turn of the 20th century. Biography Early life Clergue was born on Augu ...
, an
American American(s) may refer to: * American, something of, from, or related to the United States of America, commonly known as the "United States" or "America" ** Americans, citizens and nationals of the United States of America ** American ancestry, p ...
entrepreneur who had settled in Sault Ste. Marie. The company is a traditional
blast furnace A blast furnace is a type of metallurgical furnace used for smelting to produce industrial metals, generally pig iron, but also others such as lead or copper. ''Blast'' refers to the combustion air being supplied above atmospheric pressure. In a ...
based steel maker that is building an
electric arc furnace An electric arc furnace (EAF) is a Industrial furnace, furnace that heats material by means of an electric arc. Industrial arc furnaces range in size from small units of approximately one-tonne capacity (used in foundry, foundries for producin ...
to produce steel with a lower carbon footprint. Algoma Steel has been privately owned several times, listed on the
Toronto Stock Exchange The Toronto Stock Exchange (TSX; ) is a stock exchange located in Toronto, Ontario, Canada. It is the List of stock exchanges, 10th largest exchange in the world and the third largest in North America based on market capitalization. Based in th ...
at least three times; and has been a subsidiary or affiliate of
Canadian Pacific Limited Canadian Pacific Limited was created in 1971 to own properties formerly owned by Canadian Pacific Railway (CPR), a transportation and mining giant in Canada. In October 2001, CPR completed the corporate spin-offs of each of the remaining business ...
(1980s),
Dofasco ArcelorMittal Dofasco, a subsidiary of ArcelorMittal, is a steel company based in Hamilton, Ontario, Canada. Dofasco is a standalone subsidiary of ArcelorMittal, the world's largest integrated steel producer. History Clifton and Frank A. Sherman ...
(1988-1991) and
Essar Group Essar Group is an Indian Multinational company, multinational Conglomerate (company), conglomerate company, founded by Shashi and Ravi Ruia, Shashi Ruia and Ravi Ruia in 1969. The company, known as Essar Global Fund Limited (EGFL), owns a vari ...
(2007-2017). Reflecting the challenging environment for Canadian steel makers, Algoma and its predecessor companies have been financially restructured at least four times. Algoma first was in receivership following the
Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
in 1932; while in recent decades it emerged from
bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...
protection in 1992 and 2004, and was in creditor protection again in 2015-2018. In May 2021, it was announced that Algoma "was to become a public company again" as it had agreed a merger with New York–based acquisition firm Legato Merger Corp, which is a
NASDAQ The Nasdaq Stock Market (; National Association of Securities Dealers Automated Quotations) is an American stock exchange based in New York City. It is the most active stock trading venue in the U.S. by volume, and ranked second on the list ...
-listed
special-purpose acquisition company A special-purpose acquisition company (SPAC; ), also known as a blank check company or a blind-pool stock offering, is a shell corporation listed on a stock exchange with the purpose of acquiring (or merging with) a private company, thus taking ...
. Following the deal, Algoma listed its shares on the Toronto Stock Exchange for the third time.


History

The company was incorporated in 1901 and construction of the steelworks started in February of that year. On February 18, 1902, the first
Bessemer converter The Bessemer process was the first inexpensive industrial process for the mass production of steel from molten pig iron before the development of the open hearth furnace. The key principle is removal of impurities and undesired elements, primar ...
was put in operation using
pig iron Pig iron, also known as crude iron, is an intermediate good used by the iron industry in the production of steel. It is developed by smelting iron ore in a blast furnace. Pig iron has a high carbon content, typically 3.8–4.7%, along with si ...
made from the Helen mine, owned by Algoma. The first rails were produced by the complex in May 1902. However,
blast furnace A blast furnace is a type of metallurgical furnace used for smelting to produce industrial metals, generally pig iron, but also others such as lead or copper. ''Blast'' refers to the combustion air being supplied above atmospheric pressure. In a ...
s for pig iron manufacture were not completed at the site until 1904. Unlike most other steel producers, Algoma had no access to local
coal Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other Chemical element, elements, chiefly hydrogen, sulfur, oxygen, and nitrogen. Coal i ...
, forcing it to import coal and coke from the United States. The Bessemer process was felt to produce steel that was well-suited to manufacture of rails, which was the Algoma complex's primary product for the first two decades of its existence. Shortly after founding Algoma, Clergue's various financial operations suffered reverses, having to shutter operations in 1903, causing the
1903 Consolidated Lake Superior riot The 1903 Consolidated Lake Superior riot occurred on 28–30 September 1903 in Sault Ste. Marie, Ontario, Canada, as a result of layoffs and unpaid wages. Two police officers and four protesters were injured, the headquarters was looted, and the a ...
. After restructuring, he lost control of the Sault Ste. Marie complex, being replaced as general manager in 1903 and by 1908 Clergue was no longer on the company's board of directors. Initially, the company specialized in manufacture of
rails Rail or rails may refer to: Rail transport *Rail transport and related matters * Railway track or railway lines, the running surface of a railway Arts and media Film * ''Rails'' (film), a 1929 Italian film by Mario Camerini * ''Rail'' (1967 fi ...
for Canadian railways, but this soon became a dead-end as railway construction passed its peak. During the
First World War World War I or the First World War (28 July 1914 – 11 November 1918), also known as the Great War, was a World war, global conflict between two coalitions: the Allies of World War I, Allies (or Entente) and the Central Powers. Fighting to ...
Algoma made steel for
artillery Artillery consists of ranged weapons that launch Ammunition, munitions far beyond the range and power of infantry firearms. Early artillery development focused on the ability to breach defensive walls and fortifications during sieges, and l ...
shells but after the war continued to rely on rail production. The necessity of importing ore and coal from the United States due to the low quality of Canadian iron ore, as well as the absentee owners' greater interest in annual
dividend A dividend is a distribution of profits by a corporation to its shareholders, after which the stock exchange decreases the price of the stock by the dividend to remove volatility. The market has no control over the stock price on open on the ex ...
s than building a viable industrial complex, held back Algoma during the 1920s. At the height of the Great Depression, the company was insolvent and in
receivership In law, receivership is a situation in which an institution or enterprise is held by a receiver – a person "placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights" – especia ...
until financier
Sir James Dunn Sir James Hamet Dunn, 1st Baronet (29 October 1874 – 1 January 1956) was a Canadian financier and industrialist during the first half of the 20th century. He is recognized chiefly for his 1935 rescue and subsequent 20-year presidency and proprie ...
, who had had a minority role in the mill's ownwrship since 1908, gained control in 1935 and restored it to profitability. Dunn's policy of never paying a dividend to stockholders, coupled with extensive modernization and expansion during the
Second World War World War II or the Second World War (1 September 1939 – 2 September 1945) was a World war, global conflict between two coalitions: the Allies of World War II, Allies and the Axis powers. World War II by country, Nearly all of the wo ...
, and an extended period of steel demand up until the mid-1950s, allowed Algoma to expand and become a more balanced steel producer.


Dofasco takeover and 1990-92 bankruptcy

Algoma Steel was publicly traded on the Toronto Stock Exchange in the 1980s when Dofasco bought the company from then controlling shareholder Canadian Pacific Limited. Canadian Pacific Ltd. owned 53.8% and they agreed to a total purchase price of CAD $560 million. At the time of the transaction, it was reported that Algoma had 9,000, largely unionized, employees. Dofasco owned Algoma from 1988 to 1991, making the combined company the largest steel producer in Canada. However, Dofasco wrote-off their equity investment less than three years later as Algoma entered a prolonged restructuring process. A
strike Strike may refer to: People *Strike (surname) * Hobart Huson, author of several drug related books Physical confrontation or removal *Strike (attack), attack with an inanimate object or a part of the human body intended to cause harm * Airstrike, ...
at Algoma both reduced cash flows and increased costs, contributing to the financial stress of the company. The high value of the Canadian dollar coupled with competition from
mini mill A steel mill or steelworks is an industrial plant for the manufacture of steel. It may be an integrated steel works carrying out all steps of steelmaking from smelting iron ore to rolled product, but may also be a plant where steel semi-finishe ...
s, lower-cost and currency-strong
Asia Asia ( , ) is the largest continent in the world by both land area and population. It covers an area of more than 44 million square kilometres, about 30% of Earth's total land area and 8% of Earth's total surface area. The continent, which ...
n countries and dumping by
Japan Japan is an island country in East Asia. Located in the Pacific Ocean off the northeast coast of the Asia, Asian mainland, it is bordered on the west by the Sea of Japan and extends from the Sea of Okhotsk in the north to the East China Sea ...
ese companies has hurt Canadian primary steel producers. In 2002, the company emerged from bankruptcy protection for the second time in a decade, having previously gone into bankruptcy in 1990. Denis Turcotte, the President and CEO, was largely credited with Algoma's resurgence, making it one of the most efficient steelmakers in North America. Algoma Steel announced on August 3, 2005, that the company was no longer for sale after a $64.7 million second quarter profit. The company stated that they are going to focus on value-enhancing, non-sale alternatives. Algoma also announced a
special dividend A special dividend is a payment made by a company to its shareholders, that the company declares to be separate from the typical recurring dividend cycle, if any, for the company. Usually when a company raises the amount of its normal dividend, t ...
of $6.00 per share payable on August 31, 2005, to shareholders of record on August 17, 2005, and a normal course issuer bid for up to 3.3 million shares. On February 8, 2006, Algoma Steel announced a $55 million profit for their fourth quarter ending December 31, 2005. As a result of this and redemption of their 11% notes on January 9, 2006 the company declared themselves debt free and had an operating surplus of over $400 million in cash. This cash surplus attracted the attention of some shareholders who wanted to see the cash distributed as dividends, echoing Algoma's historic problems almost exactly a century earlier.


Essar Global takeover and subsequent restructuring

On 15 April 2007,
India India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...
's Essar Global made an offer to acquire Algoma Steel Inc. for $1.85 billion CAD in cash. It was announced on 20 June that Essar had completed its purchase of all outstanding shares. On June 23, 2008, following its purchase by Essar Group, Algoma Steel Inc. announced that its name had been changed to Essar Steel Algoma Inc. This came along with a logo change to the Essar Steel company logo. On May 26, 2017, Essar Steel Algoma was rebranded once again, simply called Algoma. The announcement was made in Sault Ste. Marie, Ontario. For legal purposes, the factory will remain "Essar Steel Algoma Inc." until the company emerges from insolvency protection. In May 2021 Algoma had a yearly production capacity of 2.8 million tonnes of steel, for which it employed around 2,700 people.


Production and energy supply


Steel making facilities

Algoma currently has a capacity of 4 million tons per year. Primary steel making facilities include two
blast furnace A blast furnace is a type of metallurgical furnace used for smelting to produce industrial metals, generally pig iron, but also others such as lead or copper. ''Blast'' refers to the combustion air being supplied above atmospheric pressure. In a ...
s, three coke batteries, two 260 short ton
basic oxygen furnace Basic oxygen steelmaking (BOS, BOP, BOF, or OSM), also known as Linz-Donawitz steelmaking or the oxygen converter process,Brock and Elzinga, p. 50. is a method of primary steelmaking in which carbon-rich molten pig iron is made into steel. Blowi ...
s, with two ladle metallurgy stations for refining and alloying. Having abandoned the manufacture of steel rails, Algoma employs a direct strip production complex manufactured by
Danieli Danieli Group () is an Italian supplier of equipment and physical plants to the metal industry. The company is based in Buttrio, in the north-east of Italy (Friuli-Venezia Giulia region). It is one of the world leaders in the production of s ...
of Italy, which casts strip directly and then rolls it to finished strip in the range of 0.047 inches to 0.625 inches in thickness, and widths to 64 inches. Algoma also operates a hot strip mill, a plate mill, and a cold strip mill. Algoma also manufactures welded structural beams.


Power generation and supply

In October 2006, Algoma Steel was awarded a power purchase agreement by the Ontario Power Authority to build, own and operate a co-generation power plant utilizing by-product fuels such as
blast furnace gas Blast furnace gas (BFG) is a by-product of blast furnaces that is generated when the iron ore is redox, reduced with coke (fuel), coke to metallic iron. It has a very low heating value, about 3.5 MJ/m3 (93 BTU/cu.ft), because it consis ...
(BFG) and coke oven gas (COG); Algoma Steel has founded a limited partnership company called Algoma Energy LP to own and operate the co-generation facility. The facility's contract capacity was said to be 63MW. On June 15, 2009, Essar Steel Algoma successfully started up a new, 85 MW
cogeneration Cogeneration or combined heat and power (CHP) is the use of a heat engine or power station to generate electricity and useful heat at the same time. Cogeneration is a more efficient use of fuel or heat, because otherwise- wasted heat from elec ...
facility, to produce electricity and steam from the by-products of the coke making and iron making processes. It features two 375,000 lb/hr boilers and a 105MW turbine combined with other related components such as a generator, a
blast furnace gas Blast furnace gas (BFG) is a by-product of blast furnaces that is generated when the iron ore is redox, reduced with coke (fuel), coke to metallic iron. It has a very low heating value, about 3.5 MJ/m3 (93 BTU/cu.ft), because it consis ...
holder, condensate and feed-water systems, a water treatment plant, a cooling tower, a transformer, and a distributed control system. Essar has set a precedent as the first integrated steel manufacturer in Canada to construct a co-generation facility fueled with by-product gas from the operation.


Current status

Algoma currently is the second largest steel producer in Canada. It is the largest employer in Sault Ste. Marie and currently has 2800 employees at the main plant. Algoma now produces hot and cold rolled steel (i.e. sheet and plate). Algoma's products are used in the automotive, construction, energy, manufacturing, pipe and tube, and steel distribution industries.


Leadership


President

# James Frater Taylor, 1909 – 31 December 1917 # William Charles Franz, 1 January 1918 – 1935 # James Hamet Dunn, Sir James Hamet Dunn, 8 May 1935 – 1 January 1956 # David Stearns Holbrook, 28 May 1956 – 1976 # Dr John Macnamara, 1976–1981 # Peter Marlborough Nixon, 1981–1990 # Robert Joseph Swenor, 1990–June 1991 # Gary Lucenti, June 1991–31 December 1992 # William Allan Hopkins, 1 January 1993–1996 # Alexander Adam, 1996–31 August 2002 # Denis Turcotte, 2002–2008 # Armando Plastino, 2008–2010 # James Hrusovsky, 2011–1 November 2012 # Kalyan Ghosh, 1 November 2012–2019 # Michael McQuade, 2019– 1 June 2022 # Michael D. Garcia, 1 June 2022 –


Chairman of the Board

# James Hamet Dunn, Sir James Hamet Dunn, 8 May 1935 – 1 January 1956 # David Stearns Holbrook, 1962 – 31 July 1977 # Walter George Ward, 1 August 1977 – 1981 # Dr John Macnamara, 1981–1990 # William Laurie Wallace, 1990–1991 # Herbert Earl Joudrie, 1991–2002 # Benjamin C. Duster, February 2002 – June 2006


References


Further reading

*


External links


Algoma production facilities

Algoma SIAG press release

New name for Algoma Steel
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