When 50 to 60 per cent of your production heads to the U.S., Algoma Steel CEO Michael Garcia could, understandably, be downcast about the near and long-term prospects of the Sault Ste. Marie plate and sheet operation.
Instead Garcia sees opportunity to broaden Algoma’s footprint in the Canadian market by chasing down and securing new customers while displacing some American steel producers during a volatile tariff war with the U.S.
In a March 13 webcall with analysts to present Algoma’s quarterly and year-end results, Garcia said the steelmaker is focusing on boosting plate production to supply burgeoning Canadian shipbuilding and defence industries.
In its year-end financials, Algoma posted a net loss of $139 million for 2024, compared to a net income of $56.8 million recorded a year earlier.
Steel shipments were 2,032,363 tons in 2024, compared to 2,206,146 tons the previous year.
The winter and spring of 2025 is a time of excitement and trepidation in Algoma’s 120-year history.
The plant is on the cusp of entering a new era of steel production with the first of two $880-million electric arc furnaces (EAF) entering first steel production in April.
All this is happening in the opening rounds of a fast-evolving trade environment, with the Trump administration hammering the Canadian steel and aluminum sector with 25 per cent tariffs on American imports.
Canada has hit back with a dollar-for-dollar 25 per cent tariff on American steel and aluminum imports.
Ottawa’s actions this week to slap retaliatory tariffs will certainly help Algoma’s cause, Garcia said, since there’s approximately 3.5 million tonnes of U.S.-made steel that’s been circulating in the Canadian market over the last 12 months.
It presents an opportunity for Algoma since the Canadian market is oversupplied with steel coil and undersupplied with plate.
“That’s an opportunity for both coil but more so even plate to start moving up in price in the Canadian market.”
Algoma produced 82,000 tons of plate in its fourth quarter. That’s expected to go even higher this year, the company said.
The Canadian market for plate is not enormously huge, Garcia explained, but in the last year there’s been more U.S.-made plate shipped cross the border than Algoma sells domestically.
“That gives us a great opportunity with the tariffs that the Canadian government announced yesterday to go out and capture more market share and more plate sales in Canada.”
Algoma has already taken the initiative to reach out and sway potentially new customers to buy Canadian.
Garcia mentioned they had discussions yesterday with plate buyers in Edmonton and other suppliers involved in the supply chain to build two new Canadian icebreakers. Ottawa awarded contracts this week, worth $4.4 billion, to Seaspan and Chantier Davie to build two heavy polar icebreakers.
Supplying plate to the marine industry, and particularly armour plate to the North American defence industries, is nothing new for Algoma.
But there’s a real likelihood of the federal government dramatically increasing spending in those sectors, presenting a great opportunity for the company, especially if Ottawa insists on a Buy-Canada requirement on government-funded projects.
“It’s a really important opportunity for us and we’re focussed on it, especially during this uncertain time of tariffs,” said Garcia.
Federal Industry Minister François-Philippe Champagne plans to do just that.
Champagne said March 13 that he’s directing Industry Canada to place a priority on funding projects that use Canadian steel and aluminum.
To mitigate the longer term impact of U.S. tariffs, Garcia said the “biggest lever” they have to control costs will be switching over to more efficient, lower cost EAF steel production and away from its traditional blast furnace of steelmaking and decommissioning its coke ovens.
That conversion process is expected to take about 12 months.
First production on the one of its two electric arc furnaces begins in a couple of weeks, with a target of producing more than 200,000 tonnes of steel this year. Most of that gradual ramp-up will be weighted toward the last two quarters of the fiscal year, the company said. The goal is produce 3 million tonnes of steel a year, beyond 2027.
There’s been much chatter that government support for the industry could extend beyond protectionary tariffs and into loans and grants. Garcia said they’ve already engaged in one-on-one discussions with federal and provincial officials on what that would look like, but had nothing to disclose other than discussions were ongoing.
In a news release, Canadian Steel Producers Association president-CEO Catherine Cobden welcomed Ottawa’s retaliatory tariffs, but she also called for government to immediately crack down with tariffs on China and other repeat offending countries, well-known for dumping steel into Canada, an unfair practice, she said that will “erode our industry’s ability to compete."
She further appealed for all levels of government to prioritize Canadian steel in publicly funded infrastructure projects, saying it shows support of the industry and those industry-dependent towns
“We are long overdue for ensuring that Canadian-made steel is being prioritized for domestic projects."