Sault Ste. Marie, Ontario
Sault Ste. Marie ( ) is a city in Ontario, Canada. It is at the St. Mary's River on the Canada–US border. It is the third largest city in Northern Ontario, after Sudbury and Thunder Bay.
The Ojibwe, the indigenous Anishinaabe inhabitants ...
, Canada. Its products are sold in Canada and the United States as well as overseas. Algoma Steel was founded in 1902 by Francis Clergue, an
American
American(s) may refer to:
* American, something of, from, or related to the United States of America, commonly known as the "United States" or "America"
** Americans, citizens and nationals of the United States of America
** American ancestry, pe ...
entrepreneur who had settled in Sault Ste. Marie. The company emerged from
bankruptcy
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debto ...
protection in 2004. In April 2007, Algoma Steel was purchased by
India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area, the List of countries and dependencies by population, second-most populous ...
's
Essar Group
Essar Group is an Indian multinational conglomerate company, founded by Shashi Ruia and Ravi Ruia in 1969. As Essar Global Fund Limited (EGFL), the company controls a number of assets across the core sectors of energy (oil refining, oil an ...
for US$ 1.63 billion, continuing operations as a subsidiary known as Essar Steel Algoma Inc. It was purchased again in 2017, by a group of US investors.
In May 2021, it was announced that Algoma "was to become a public company again" as it had agreed a merger with New York-based acquisition firm Legato Merger Corp, which is a
NASDAQ
The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City. It is the most active stock trading venue in the US by volume, and ranked second ...
-listed
special-purpose acquisition company
A special purpose acquisition company (SPAC; ), also known as a "blank check company", is a shell corporation listed on a stock exchange with the purpose of acquiring a private company, thus making it public without going through the traditional ...
. The deal would give Algoma just over $1.1 billion US worth of new shares in Legato.
History
Construction of the steelworks started in February, 1901. On February 18, 1902 the first
Bessemer converter
The Bessemer process was the first inexpensive industrial process for the mass production of steel from molten pig iron before the development of the open hearth furnace. The key principle is removal of impurities from the iron by oxidation ...
was put in operation using
pig iron
Pig iron, also known as crude iron, is an intermediate product of the iron industry in the production of steel which is obtained by smelting iron ore in a blast furnace. Pig iron has a high carbon content, typically 3.8–4.7%, along with ...
made from the Helen mine, owned by Algoma. The first rails were produced by the complex in May 1902. However,
blast furnace
A blast furnace is a type of metallurgical furnace used for smelting to produce industrial metals, generally pig iron, but also others such as lead or copper. ''Blast'' refers to the combustion air being "forced" or supplied above atmospheri ...
s for pig iron manufacture were not completed at the site until 1904. Unlike most other steel producers, Algoma had no access to local
coal
Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen.
Coal is formed when ...
, forcing it to import coal and coke from the United States. The Bessemer process was felt to produce steel that was well-suited to manufacture of rails, which was the Algoma complex's primary product for the first two decades of its existence.
Shortly after founding Algoma, Clergue's various financial operations suffered reverses and he lost control of the Sault Ste. Marie complex, being replaced as general manager in 1903 and by 1908 was no longer on the company's board of directors. Initially the company specialized in manufacture of
rails
Rail or rails may refer to:
Rail transport
*Rail transport and related matters
*Rail (rail transport) or railway lines, the running surface of a railway
Arts and media Film
* ''Rails'' (film), a 1929 Italian film by Mario Camerini
* ''Rail'' ( ...
for Canadian railways, but this soon became a dead-end as railway construction passed its peak.
During the
First World War
World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...
Algoma made steel for
artillery
Artillery is a class of heavy military ranged weapons that launch munitions far beyond the range and power of infantry firearms. Early artillery development focused on the ability to breach defensive walls and fortifications during si ...
shells but after the war continued to rely on rail production. The necessity of importing ore and coal from the United States due to the low quality of Canadian iron ore, as well as the absentee owners' greater interest in annual
dividend
A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-i ...
s than building a viable industrial complex, held back Algoma during the 1920s. At the height of the
Great Depression
The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
, the company was insolvent and in
receivership
In law, receivership is a situation in which an institution or enterprise is held by a receiver—a person "placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights"—especially in c ...
until
Sir James Dunn
Sir James Hamet Dunn, 1st Baronet (October 29, 1874 – January 1, 1956) was a Canadian financier and industrialist during the first half of the 20th century. He is recognized chiefly for his 1935 rescue and subsequent 20-year presidency and propri ...
gained control in 1935 and restored it to profitability. Dunn's policy of never paying a dividend to stockholders, coupled with extensive modernization and expansion during the
Second World War
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposi ...
, and an extended period of steel demand up until the mid-1950s, allowed Algoma to expand and become a more balanced steel producer.
From 1988 to 1991 Algoma was owned by
Dofasco
ArcelorMittal Dofasco is a steel company based in Hamilton, Ontario, Canada. Dofasco is a standalone subsidiary of ArcelorMittal, the world's largest integrated steel producer.
History
Clifton and Frank A. Sherman founded Dominion Foundries and S ...
, making the combined company the largest steel producer in Canada. However, a strike at Algoma and other Dofasco subsidiaries in 1990 caused Dofasco to abandon ownership.
The high value of the Canadian dollar coupled with competition from mini mills, lower-cost and currency-strong
Asia
Asia (, ) is one of the world's most notable geographical regions, which is either considered a continent in its own right or a subcontinent of Eurasia, which shares the continental landmass of Afro-Eurasia with Africa. Asia covers an are ...
Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the n ...
ese companies has hurt Canadian primary steel producers. In 2002, the company emerged from bankruptcy protection for the second time in a decade, having previously gone into bankruptcy in 1990. Denis Turcotte, the President and CEO, was largely credited with Algoma's resurgence, making it one of the most efficient steelmakers in North America.
Algoma Steel announced on August 3, 2005, that the company was no longer for sale after a $64.7 million second quarter profit. The company stated that they are going to focus on value-enhancing, non-sale alternatives. Algoma also announced a
special dividend
A special dividend is a payment made by a company to its shareholders, that the company declares to be separate from the typical recurring dividend cycle, if any, for the company.
Usually when a company raises the amount of its normal dividend, t ...
of $6.00 per share payable on August 31, 2005 to shareholders of record on August 17, 2005 and a normal course issuer bid for up to 3.3 million shares.
On February 8, 2006, Algoma Steel announced a $55 million profit for their fourth quarter ending December 31, 2005. As a result of this and redemption of their 11% notes on January 9, 2006 the company declared themselves debt free and had an operating surplus of over $400 million in cash. This cash surplus attracted the attention of some shareholders who wanted to see the cash distributed as dividends, echoing Algoma's historic problems almost exactly a century earlier.
In October 2006, Algoma Steel was awarded a
power purchase agreement
A power purchase agreement (PPA), or electricity power agreement, is a contract between two parties, one which generates electricity (the seller) and one which is looking to purchase electricity (the buyer). The PPA defines all of the commercial te ...
by the Ontario Power Authority to build, own and operate a co-generation power plant utilizing by-product fuels such as
blast furnace gas
Blast furnace gas (BFG) is a by-product of blast furnaces that is generated when the iron ore is reduced with coke to metallic iron. It has a very low heating value, about 93 BTU/cubic foot (3.5 MJ/m3), because it consists of about 51 ...
(BFG) and coke oven gas (COG); Algoma Steel has founded a limited partnership company called Algoma Energy LP to own and operate the co-generation facility. The facility's contract capacity was said to be 63MW.
On 15 April 2007, Essar Global made an offer to acquire Algoma Steel Inc. for 1.85 billion CAD in cash. It was announced on 20 June that Essar had completed its purchase of all outstanding shares.
On June 23, 2008, following its purchase by Essar Group, Algoma Steel Inc. announced that its name had been changed to Essar Steel Algoma Inc. This came along with a logo change to the Essar Steel company logo.
On May 26, 2017, Essar Steel Algoma was rebranded once again, simply called Algoma. The announcement was made in Sault Ste. Marie, Ontario. For legal purposes, the factory will remain "Essar Steel Algoma Inc." until the company emerges from insolvency protection.
In May 2021 Algoma had a yearly production capacity of 2.8 million tonnes of steel, for which it employed around 2,700 people.
Steel making facilities
Algoma currently has a capacity of 4 million tons per year. Primary steel making facilities include two
blast furnace
A blast furnace is a type of metallurgical furnace used for smelting to produce industrial metals, generally pig iron, but also others such as lead or copper. ''Blast'' refers to the combustion air being "forced" or supplied above atmospheri ...
basic oxygen furnace
Basic oxygen steelmaking (BOS, BOP, BOF, or OSM), also known as Linz-Donawitz steelmaking or the oxygen converter processBrock and Elzinga, p. 50. is a method of primary steelmaking in which carbon-rich molten pig iron is made into steel. Blowing ...
s, with two ladle metallurgy stations for refining and alloying. Algoma has a direct strip production complex manufactured by
Danieli
Danieli Group () is an Italian supplier of equipment and physical plants to the metal industry. The company is based in Buttrio, in the north-east of Italy ( Friuli-Venezia-Giulia region). It is one of the world leaders in the production of ...
of Italy, which casts strip directly and then rolls it to finished strip in the range of 0.047 inches to 0.625 inches in thickness, and widths to 64 inches. Algoma also operates a hot strip mill, a plate mill, and a cold strip mill. Algoma also manufactures welded structural beams.
Current status
Algoma currently is the second largest steel producer in Canada. It is the largest employer in Sault Ste. Marie and currently has 2800 employees at the main plant. Algoma now produces hot and cold rolled steel (i.e. sheet and plate).
Algoma's products are used in the automotive, construction, energy, manufacturing, pipe and tube, and steel distribution industries.
On June 15, 2009, Essar Steel Algoma successfully started up a new, 85 MW
cogeneration
Cogeneration or combined heat and power (CHP) is the use of a heat engine or power station to generate electricity and useful heat at the same time.
Cogeneration is a more efficient use of fuel or heat, because otherwise- wasted heat from elec ...
facility, to produce electricity and steam from the by-products of the coke making and iron making processes.
It features two 375,000 lb/hr boilers and a 105MW turbine combined with other related components such as a generator, a
blast furnace gas
Blast furnace gas (BFG) is a by-product of blast furnaces that is generated when the iron ore is reduced with coke to metallic iron. It has a very low heating value, about 93 BTU/cubic foot (3.5 MJ/m3), because it consists of about 51 ...
holder, condensate and feed-water systems, a water treatment plant, a cooling tower, a transformer, and a distributed control system. Essar has set a precedent as the first integrated steel manufacturer in Canada to construct a co-generation facility fueled with by-product gas from the operation.