As Algoma Steel prepares to increase its production by one-third with two new electric arc furnaces, could the company be targeted for a merger or acquisition?
That possibility was briefly raised during an earnings conference call Wednesday by Lucas Nathaniel Pipes, senior vice president and equity analyst at B. Riley Securities, Inc.
It was neither confirmed nor denied by chief executive officer Michael Garcia.
"I saw a very active process in the U.S. with U.S. Steel. I wondered how you look at the m&a landscape at this time?" Pipes asked. "Is there something that you think strategically could benefit Algoma? Or how do you expect the landscape to evolve?"
CEO Garcia responded: "While I'm sure it will evolve, our policy is not to speculate or comment on how we may be thinking around specific m&a opportunities. But I appreciate the question."
Pipes pressed him further on the possibility: "Anything that would strategically maybe be uniquely beneficial to Algoma? Or is it really just focused, from your side, nothing?"
Garcia then pivoted to what appeared to be his main talking point of the day: "Yeah, our short-term strategic path is clear. We believe that the [electric arc furnace] brings a tremendous strategic value to Algoma. We're on time, on budget. And we very much look forward to beginning commissioning at the end of this year."
U.S. Steel is set to be acquired by the end of September by Japan's Nippon Steel but the deal is drawing criticism and former U.S. President Donald Trump says he'll block the transaction if he's re-elected in November.
Garcia was also asked today, given January's piping collapse at the coke ovens, whether Algoma still intends to continue operating the ovens and #7 blast furnace as it begins electric-arc steelmaking in 2025.
"Right now, our plan still remains to operate in 2025 in a hybrid mode," he said.
"That's been the plan for some time. We think it makes the right financial sense. Obviously, financial will continue to keep a very close eye on that."
"Given the incident in the past two weeks, we'll have to understand the state of the assets and make sure we're comfortable with the asset integrity of both the blast furnace... as well as the coke ovens," Garcia said.