Algoma Steel Secures $500M in Loans to Adapt Production Strategy

Algoma Steel Group Inc., the second largest steel producer in Canada, has been awarded $500 million in loan assistance to adjust its production strategy in response to U.S. tariffs. The financial support consists of $400 million from the federal government and $100 million from the Ontario provincial government. This initiative aims to help the company mitigate the adverse effects of tariffs imposed on Canadian steel.

The loans will specifically be drawn from the Large Enterprise Tariff Loan program, which was established in March 2025 as part of a broader $10 billion financing initiative to assist companies facing challenges due to tariffs. The Canadian government recognizes the profound impact these tariffs have had on the steel sector, prompting this significant financial intervention.

Michael Garcia, CEO of Algoma Steel, emphasized the challenges posed by U.S. President Donald Trump‘s ongoing 50 percent steel tariffs, which have effectively isolated Canadian steel from the American market. This situation has rendered some of Algoma’s existing operations unsustainable and accelerated the need to transition to electric arc furnace steelmaking, a process known for being more energy-efficient compared to traditional blast furnaces. The anticipated cost for this transition is approximately $987 million.

Government Support Aims for Industry Resilience

The financial assistance is not only intended to support Algoma Steel in maintaining its operations but also to reduce workforce disruptions. Algoma currently employs around 2,500 full-time workers, and the government aims to preserve these jobs while encouraging a shift towards a production model that is less dependent on the U.S. market.

Ottawa has shown a commitment to incorporating more domestic steel into Canadian infrastructure and defense projects, further supporting the local industry. Mélanie Joly, Canada’s Minister of Industry, commented that the loan is about “building resilience” in the Canadian steel industry, ensuring its sustainability for future generations.

The shift to electric arc furnace technology is expected to enhance Algoma’s ability to produce the specific types of steel required by the Canadian market. This transition aligns with Ottawa’s goals for increasing domestic production and reducing reliance on foreign steel sources.

As Algoma Steel embarks on this substantial transformation, it reflects the broader challenges faced by the steel industry in Canada. The loan assistance highlights the government’s proactive approach to maintain a competitive steel sector in the face of international trade pressures.

This development was first reported by The Canadian Press on September 29, 2025, underlining the significance of government support in navigating the complexities of modern manufacturing and trade dynamics.