U.S. Steel alleges Algoma Steel is in breach of contract

Algoma Steel is being sued by an American steel company that alleges it backed out of purchasing millions of tons of iron ore pellets. 

U.S. Steel says Algoma agreed to purchase the iron ore pellets five years ago, but Algoma declined to honour the agreement earlier this year when U.S. President Donald Trump introduced 50-per-cent tariffs on aluminum and steel.

U.S. Steel alleges Algoma Steel is in breach of contract. 

SooToday has reached out to Algoma Steel for comment.

According to the complaint, filed in federal court in Pittsburgh, U.S. Steel and Algoma entered into a contract in May 2020 calling for Algoma to buy millions of tons of iron ore pellets — mined and processed by U.S. Steel facilities in Minnesota — for negotiated rates, TribLive.com‘s Paula Reed Ward reported last night. 

The contract is apparently good until January 2027 and is governed by Pennsylvania law, which requires all disputes be decided through arbitration proceedings in Pittsburgh.

“Now Algoma has buyer’s remorse and wants out of the deal,” the lawsuit says, according to the TribLive story.

“It has repudiated the contract by refusing the latest shipment of iron ore pellets and has affirmatively told U.S. Steel that it will not accept any more iron ore pellets or otherwise honour the parties’ contract.

“A deal is a deal.”

The story says Algoma Steel owes U.S. Steel more than $22 million, and losses for U.S. Steel on the contract could amount to $100 million.

U.S. Steel said Algoma has not consented to arbitration in Pittsburgh. Instead, Algoma Steel told U.S. Steel it plans to seek relief in a Canadian court and will ask for a declaration finding that the contract is no longer binding.

The lawsuit said  Algoma refused a shipment of the iron ore pellets in late September.

Then on Sept. 29, the company wrote a letter to U.S. Steel in which it blamed the Trump administration’s tariffs on Canadian steel “for creating a situation where Algoma’s blast furnace steel, created using iron ore pellets, was no longer competitive in the American market,” the story says.

On the same day that Algoma Steel apparently wrote that letter, SooToday reported the company receiving a $500-million loan from the federal and provincial governments. 

This is a developing story that will be updated as more information comes in.