{"id":19061,"date":"2025-07-23T22:43:08","date_gmt":"2025-07-23T22:43:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/19061\/"},"modified":"2025-07-23T22:43:08","modified_gmt":"2025-07-23T22:43:08","slug":"algoma-steel-seeks-up-to-600-million-from-ottawa-in-emergency-trade-war-relief","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/19061\/","title":{"rendered":"Algoma Steel seeks up to $600-million from Ottawa in emergency trade war relief"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Algoma Steel’s facility in Sault Ste. Marie, Ont., in April. The company is asking Ottawa for half a billion dollars in tariff relief.Sean Kilpatrick\/The Canadian Press<\/p>\n

Algoma Steel Group Inc. ASTL-T<\/a> chief executive Michael Garcia says the Canadian steelmaker is in discussions with Ottawa to try to secure a financing package worth more than half a billion dollars as financial pressures mount during a vicious trade war with the United States.<\/p>\n

U.S. President Donald Trump in March imposed 25-per-cent tariffs on global imports of steel in the U.S. He doubled the tariff to 50 per cent last month, which essentially closed the American market entirely to Canadian steelmakers.<\/p>\n

Algoma Steel, based in Sault Ste. Marie, Ont., has outsized exposure to the tariffs, owing to its single Ontario mill relying heavily on the U.S. market. Before the trade war began, it sold roughly 60 per cent of its output to the U.S.<\/p>\n

Mr. Garcia in an interview on Wednesday said the company is in discussions with the federal government and hopes to secure between $400-million and $600-million in loans to help keep it afloat over the medium term. The package could also eventually include an equity component. <\/p>\n

Ottawa recently changed the rules that now permit it to hold equity in companies under the Canada Enterprise Emergency Funding Corporation<\/a>.<\/p>\n

John Fragos, press secretary for Finance Minister Fran\u00e7ois-Philippe Champagne, did not directly answer a question from The Globe and Mail about the discussions, but listed various funding avenues that the government has made available to help the steel industry navigate the tariff crisis, including loans through the LETL facility.<\/p>\n

\u201cThis work is ongoing,\u201d he said in an e-mail. \u201cWe are in constant discussion with the steel industry, through private meetings and biweekly meetings with the newly created Steel Task Forces.\u201d<\/p>\n

With no imminent end to the trade war in sight, Algoma is adjusting to a new reality that will likely see the U.S. market closed to it for the foreseeable future. <\/p>\n

The company is trying to sell more of its output in its home market. But replacing all of that U.S. revenue with Canadian customers will take a long time, if the company can get there at all, said Mr. Garcia. <\/p>\n

\u201cThe challenge is that it needs to happen quickly, because we don\u2019t have the luxury of seeing things move at a moderate pace,\u201d he said. <\/p>\n

\u201cIf the 50-per-cent tariffs extend any length of time beyond August 1, Algoma is going to be under pretty significant pressure.\u201d<\/p>\n

Prime Minister Mark Carney played down the importance of a looming Aug. 1 deadline in trade talks with the U.S. on Tuesday, saying the objective is to get the best possible deal for Canadians. <\/p>\n

The Canadian Press<\/p>\n

Prime Minister Mark Carney has said that a tariff-free trade deal between Canada and the U.S. doesn\u2019t appear to be realistic, and the timing of any pact is also up in the air. Previously, he had targeted Aug. 1 to reach an agreement.<\/p>\n

Securing a financing package with Ottawa that Algoma considers fair has been difficult.<\/p>\n

Mr. Garcia said that the initial term sheet that the government provided to the company came with extremely onerous terms, and was presented on a \u201ctake it or leave it\u201d basis. <\/p>\n

Ottawa is tabling the loans through its $10-billion Large Enterprise Tariff Loan<\/a> (LETL) financing facility which was announced in March at the dawn of the trade war to help companies battling tariffs. <\/p>\n

\u201cIt was frankly, pretty unappealing, \u201dsaid Mr. Garcia of the financing package.<\/p>\n

\u201cA very high interest rate, high fees, it had mechanisms for granting the government warrants, which would be calculated based on a stock price that has been greatly hit by the tariffs. And so it would be pretty dilutive to the shareholders of Algoma.\u201d<\/p>\n

Open this photo in gallery:<\/a><\/p>\n

Algoma Steel CEO Michael Garcia at the company’s Sault Ste. Marie plant in March.Fred Lum\/The Globe and Mail<\/p>\n

Mr. Garcia is pushing the government to lend to Algoma on far better terms than it has so far proposed and recognize that the company\u2019s long-term survival is in the country\u2019s public interest, owing to its strategic importance to the Canadian economy. <\/p>\n

Algoma is Canada\u2019s last remaining independent primary steel maker. The other two steelmakers that have sizable operations in Canada, ArcelorMittal Dofasco and Stelco, are both owned by foreign giants. Algoma is also the only Canadian manufacturer of steel plate used in the defence sector. It is transitioning to be a low carbon emitter, and aiming to be the lowest-cost operator in Canada by the end of 2026. <\/p>\n

Mr. Garcia pointed out that the federal government has historically provided funding to the company at extremely favourable terms, and is pushing for a similar financing package now.<\/p>\n

Ottawa provided the company with a $200-million loan to build its new electric arc furnace. The loan is forgivable if Algoma meets certain emissions standards stemming from using the EAF that will see it shut down its blast furnace over time. <\/p>\n

In addition, the government provided the company with a $130-million loan to modernize its plate mill, also at favorable terms. <\/p>\n

While the government has reduced its interest rate on its original term sheet by 200 basis point, the terms are still far too onerous, said Mr. Garcia. <\/p>\n

\u201cIt\u2019s still higher than other types of financing,\u201d he said. <\/p>\n

Mr. Garcia made it clear that the company isn\u2019t facing an immediate liquidity crisis, even if the government financing doesn\u2019t materialize. <\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Algoma Steel’s facility in Sault Ste. Marie, Ont., in April. The company is…\n","protected":false},"author":2,"featured_media":19062,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-19061","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/19061","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=19061"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/19061\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/19062"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=19061"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=19061"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=19061"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}