The largest employer in the northern Ontario city of Sault Ste. Marie is getting half a billion dollars in government loans to maintain its workforce in the face of U.S. tariffs.
Federal Jobs Minister Patty Hadju made the announcement at the steel mill on Monday morning.
The federal government has entered into a "term sheet" through its "large enterprise tariff loan" to provide Algoma Steel with a $400-million loan, and the Ontario government has agreed to provide $100 million under the same terms.
A release from Ottawa says the funding is to allow the plant to "continue operations, transition to a business model less reliant on the United States and limit disruption to its workforce."
"Our corporations are not immune to the kinds of attacks that we're seeing, nor to the changing technologies that are coming our way," Hajdu told reporters Monday.
The loan is a part of a $10-billion financing facility announced in March for large companies to help them fight the tariffs and counter-measures. It complements a slew of other tariff-related measures announced by the federal government for the Canadian steel industry.
Bar high for loans from taxpayer money, says CEO
Algoma Steel CEO Michael Garcia, who was also at Monday morning news conference, noted the loans will buy Algoma Steel valuable time to meet ongoing tariff-related challenges.
Standing in front of one of the mill's two future electric arc furnaces, Garcia said the loan will also provide much-needed assistance as the company transitions away from its coke oven steel production.
"[The tariffs] have taken our largest historical market and effectively closed it to us," he said. "We have to adjust our production down, take costs down and pivot to a future where primarily we are thriving on a Canadian domestic steel market."
Algoma is Sault Ste. Marie's largest employer. (Justin Tang/The Canadian Press)
Additional details surrounding the loans, including interest charges, will eventually be released to the public, according to Garcia.
He said the bar for public scrutiny and openness with the government is high as the $500 million in funding comes directly from Ontarian and Canadian taxpayers.
But as long as the country's economy is thriving, so too will the steel industry, Garcia said.
"If you look at the future Prime Minister [Mark] Carney and the new government have been talking about, it's a future that involves more defence spending, more marine spending and infrastructure spending," he said. "Combine the government's stated preference that steel needs to be Canadian, that's going to result in a thriving domestic steel industry."
Changes being made to meet demand
According to Garcia, Algoma Steel's plate-making business remains strong. However, there isn't enough demand for the plant's coil business.
"We're going to be reducing some of that production going forward," he said. "We have to understand, what do we diversify to? Is it going to be beams, rail or other forms of steel? That's the work we're doing now."
Algoma Steel CEO Michael Garcia, who was also at Monday's news conference, says the company is looking at ways to diversify. (Alex Flood/CBC)
Hajdu said the loan announcement remains a significant investment in the future of workers in Sault Ste. Marie.
"I can't predict what's going to happen in the future, but I can tell you that we're all in this together. If there are layoffs for a period of time, the Canadian government will be there with tools on the training side as workers may need to retool to different processes and kinds of production methods."
Founded in 1901, Algoma Steel says it's now one of North American's leading manufacturers of hot- and cold-rolled steel sheet and plate products. It employs about 2,600 people in the city, which has a population of around 72,000.
In July, the company said it had applied for a $500-million loan from Ottawa as it faces 50 per cent tariffs on Canadian steel exports to the United States.
In a news release at the time, the company said it's "concerned with the significant impact" the tariffs are having on its operations and outlook.
[SRC] https://www.cbc.ca/news/canada/sudbury/algoma-steel-ottawa-ontario-funding-1.7646160
