Algoma Steel
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See also Algoma (Disambiguation)
Algoma
Algoma may refer to:* Algoma * Algoma * Algoma Central Railway* Algoma District, Ontario* Algoma, Mississippi* Algoma, Oregon* Algoma, West Virginia* Algoma, Wisconsin, a city* Algoma, Winnebago County, Wisconsin, a town...



Essar Steel Algoma (formerly Algoma Steel) is an integrated primary steel producer
Steel mill
A steel mill or steelworks is an industrial plant for the manufacture of steel.Steel is an alloy of iron and carbon. It is produced in a two-stage process. First, iron ore is reduced or smelted with coke and limestone in a blast furnace, producing molten iron which is either cast into pig iron or...

 located on the St. Marys River
St. Marys River (Michigan-Ontario)
The St. Marys River , sometimes written as the St. Mary's River, drains Lake Superior, starting at the end of Whitefish Bay and flowing 74.5 miles southeast into Lake Huron, with a fall of ....

 in Sault Ste. Marie, Ontario
Sault Ste. Marie, Ontario
Sault Ste. Marie is a city on the St. Marys River in Algoma District, Ontario, Canada. It is the third largest city in Northern Ontario, after Sudbury and Thunder Bay, with a population of 74,948. The community was founded as a French religious mission: Sault either means "jump" or "rapids" in...

, Canada. Its products are sold in Canada and the United States as well as overseas. Algoma Steel was founded in 1902 by Francis Clergue
Francis Clergue
Francis Hector Clergue was an American businessman who became the leading industrialist of Sault Ste. Marie, Ontario in Canada, at the turn of the 20th century....

, an American
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 entrepreneur who had settled in Sault Ste. Marie. The company emerged from bankruptcy protection in 2004. In April 2007, Algoma Steel was purchased by India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...

's Essar Group
Essar Group
The Essar Group is a multinational conglomerate corporation in the sectors of Steel, Energy, Power, Communications, Shipping Ports & Logistics as well as Construction head quartered at Mumbai, India...

for US$ 1.63 billion, continuing operations as a subsidiary known as Essar Steel Algoma Inc.

History

On February 18, 1902 the first Bessemer converter was put in operation using pig iron
Pig iron
Pig iron is the intermediate product of smelting iron ore with a high-carbon fuel such as coke, usually with limestone as a flux. Charcoal and anthracite have also been used as fuel...

 made from the Helen mine, owned by Algoma. The first rails were produced by the complex in May 1902. However, blast furnace
Blast furnace
A blast furnace is a type of metallurgical furnace used for smelting to produce industrial metals, generally iron.In a blast furnace, fuel and ore and flux are continuously supplied through the top of the furnace, while air is blown into the bottom of the chamber, so that the chemical reactions...

s for pig iron manufacture were not completed at the site until 1906. Unlike most other steel producers, Algoma had no access to local coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...

, forcing it to import coal and coke
Coke (fuel)
Coke is the solid carbonaceous material derived from destructive distillation of low-ash, low-sulfur bituminous coal. Cokes from coal are grey, hard, and porous. While coke can be formed naturally, the commonly used form is man-made.- History :...

 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 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 St. 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 transport
Rail transport is a means of conveyance of passengers and goods by way of wheeled vehicles running on rail tracks. In contrast to road transport, where vehicles merely run on a prepared surface, rail vehicles are also directionally guided by the tracks they run on...

 for Canadian railways, but this soon became a dead-end as railway construction passed its peak. During the First World War Algoma made steel for artillery
Artillery
Originally applied to any group of infantry primarily armed with projectile weapons, artillery has over time become limited in meaning to refer only to those engines of war that operate by projection of munitions far beyond the range of effect of personal weapons...

 shells but after the war continued to rely on rail production. Low quality of Canadian iron ore and the necessity to import ore and coal from the United States, as well as absentee owners more interested in annual dividends than building a viable industrial complex, held back Algoma during the 1920s. At the height of the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...

, the company was insolvent and in receivership until Sir James Dunn 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
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...

, and an extended period of steel controls 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
Dofasco
Dofasco is a steel company based in Hamilton, Ontario, Canada, which is also home to longtime Canadian rival Stelco. Dofasco is currently a standalone subsidiary of ArcelorMittal, the world's largest steel producer. Previously ordered by the U.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.

Artificially-inflated value of the Canadian dollar coupled with competition from mini mills, lower-cost and currency-strong Asia
Asia
Asia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...

n countries and dumping
Dumping (pricing policy)
In economics, "dumping" is any kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market, or in quantities that cannot be explained through normal market...

 by Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

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.
In 2004, Algoma entered into the process of purchasing Stelco
Stelco
US Steel Canada is a steel company based in Hamilton, Ontario, Canada.-History:Several existing smaller steelworks combined and were incorporated as the Steel Company of Canada in 1910. Charles S...

, which is based in Hamilton, Ontario
Hamilton, Ontario
Hamilton is a port city in the Canadian province of Ontario. Conceived by George Hamilton when he purchased the Durand farm shortly after the War of 1812, Hamilton has become the centre of a densely populated and industrialized region at the west end of Lake Ontario known as the Golden Horseshoe...

, with a plan to run the two companies as one large integrated producer. On February 9, 2005, after a fourth quarter of record profit, Algoma withdrew from its purchase intentions, citing risk.

Algoma Steel announced on August 3, 2005, that the company was no longer for sale after a $64.7 million dollar second quarter profit. The company stated that they are going to focus on value-enhancing, non-sale alternatives. Algoma also announced a special dividend
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 its normal dividend, the investor expectation is that this marks a sustained increase...

 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 dollar 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 dollars 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 February 2006, Algoma announced it was participating in a joint venture with SIAG Corporation of Germany for manufacture of towers for wind turbine
Wind turbine
A wind turbine is a device that converts kinetic energy from the wind into mechanical energy. If the mechanical energy is used to produce electricity, the device may be called a wind generator or wind charger. If the mechanical energy is used to drive machinery, such as for grinding grain or...

s. The capacity of the plant, to be located next to the Algoma site, will be 180 towers per year.

In October 2006, Algoma Steel was awarded by the Ontario Power Authority to build, own and operate a co-generation power plant utilizing by-product fuels such as BFG and 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.

Steel making facilities

Algoma currently has a capacity of 2.8 million tons per year. Primary steel making facilities include two blast furnace
Blast furnace
A blast furnace is a type of metallurgical furnace used for smelting to produce industrial metals, generally iron.In a blast furnace, fuel and ore and flux are continuously supplied through the top of the furnace, while air is blown into the bottom of the chamber, so that the chemical reactions...

s, three coke batteries
Coke (fuel)
Coke is the solid carbonaceous material derived from destructive distillation of low-ash, low-sulfur bituminous coal. Cokes from coal are grey, hard, and porous. While coke can be formed naturally, the commonly used form is man-made.- History :...

, two, 260 short ton basic oxygen furnaces, with two ladle metallurgy stations for refining and alloying. Algoma has a direct strip production complex manufactured by Danieli 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 third largest steel producer in Canada. It is the largest employer in Sault Ste. Marie and currently has 3500 employees at the main plant. Algoma now produces steel strip (i.e. plate and sheet type) which forms its main money maker along with its blanking operations and welded beams.

Essar Steel is a worldwide producer of steel selling to countries such as India, Canada, United States and Asia. It is a fully integrated steel producer with a raw steel production capacity of approximately 2.8 million tons per year. Many of its products are sold in consumer sectors, such as automotive, white goods, construction, engineering and shipbuilding.
The plant's current production capacity is 4 million tonnes per annum (MTPA). Some of the key equipment at the plant includes a low-cost, technologically advanced Direct Strip Production Complex (DSPC), a slab caster, a 106-inch strip mill (one of the widest in North America), a 166-inch plate mill, a cold mill and blanking facility that helps produce steel customized for client requirements, and a welded beam division. Revenues are primarily derived from the manufacture and sale of hot and cold rolled sheet and plate. Algoma's products are used in the automotive, construction, energy, manufacturing, pipe and tube, and steel distribution industries.
The Direct Stripe Production Complex is a new addition to Essar Steel. DSPC is the newest thin slab caster coupled with direct hot rolling in North America. The Heat-Treated Plate facility provides heat treated products for abrasion resistant, ballistic and other specialty plate applications. First stage configured blanks and large profile welded shapes and profiles are also made.

Essar Steel Algoma confirmed June 15, 2009 they have successfully started up a new, 70 MW Co-generation Facility. A final performance test on Saturday, June 13 confirmed the facility meets all necessary operating standards as required by the Ontario Power Authority. The co-generation facility converts by-product fuels from the coke making and iron making processes into electricity and steam for the steelworks.

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
Blast furnace gas 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, because it consists of about 60 percent nitrogen, 18-20% carbon dioxide and some oxygen, which are not flammable....

 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.

External Reference

  • Duncan McDowall, Steel at the Sault: Francis H. Clergue, Sir James Dunn, and the Algoma Steel Corporation 1901-1956, University of Toronto Press, Toronto, 1988 ISBN 0-8020-6736-0
  • Algoma production facilities
  • Algoma SIAG press release
  • New name for Algoma Steel, SooToday.com
    SooToday.com
    SooToday.com is a regional news website in Sault Ste. Marie, Ontario.The site was created in 2000 as a regional tabloid shopping and business directory...

    , 23 June 2008.
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