Algoma Steel Faces Layoffs, Projects Up to $90M Loss This Quarter

BREAKING: Algoma Steel has just announced it is bracing for significant layoffs as it projects an adjusted loss of up to $90 million for its third quarter, which ended yesterday. This urgent news follows a positive announcement days earlier about $500 million in federal and provincial loans aimed at supporting the company’s transition to low-carbon steelmaking.

The Sault Ste. Marie, Ontario-based steel manufacturer expects steel shipments for the quarter to fall between 415,000 and 420,000 net tons, a stark decline from last year’s 520,443 net tons and an EBITDA of $3.5 million. CEO Michael Garcia remains optimistic despite challenges, stating, “Despite ongoing trade headwinds, we achieved first arc and first steel from our electric arc furnace (EAF) in July, marking a critical milestone in our transformation to low-carbon steelmaking.”

However, the steel industry is facing dire circumstances as the continuation of Section 232 tariffs has severely restricted Algoma’s access to the U.S. market. This has forced the company to pivot towards domestic production with a focus on products that meet local demand. The company announced plans to expedite the closure of its traditional blast furnace operations, which are no longer sustainable under current market conditions.

Garcia informed workers that the company now anticipates the total cost of completing the EAF project will be approximately C$987 million. “The tariffs have made continued operation of the company’s blast furnace and coke ovens unsustainable,” he stated. This shift to EAF production is expected to result in job reductions, raising concerns among members of United Steelworkers Local 2251, the largest bargaining group at the mill.

In a message to workers, Garcia acknowledged the hardships faced by employees: “I know the past nine months have been hard. The U.S. tariffs closed off our largest market, and that has had real consequences. Many of you have worried about your jobs, your families, and your future here at Algoma.” He emphasized the company’s commitment to transparency during this turbulent phase.

The union has expressed concerns regarding the rapid transition, highlighting that the shift to EAF technology typically leads to staffing reductions. They have been in ongoing discussions with the company about mitigation strategies, such as re-training programs for affected workers, as well as potential layoffs.

Adding to the upheaval, David Sgro has resigned from Algoma’s board of directors for personal reasons. In his farewell statement, he reflected on the transformative period for Algoma and expressed confidence in its future.

This developing story raises critical questions about the future of Algoma Steel and its workforce. The company’s next steps will be closely monitored as it navigates the complexities of a changing market landscape and the implications for its employees and local economy.

Stay tuned for further updates on this urgent situation affecting Algoma Steel and its community.