Algoma sees reduction in revenue

Sault Ste. Marie, Ontario-based Algoma Steel Group Inc. says its revenue dropped considerably in its fiscal year 2022 third quarter, which lines up with the fourth quarter of the 2022 calendar year. CEO Michael Garcia says he has been “disappointed by the level of production and shipments in the last two quarters.”

In commenting on Algoma’s 2022 results, Garcia also says, “Our transformation to electric arc steelmaking is progressing as expected, and we will maintain our relentless focus on creating long-term value for all of our stakeholders.”

Algoma says it has made “substantial progress” on the construction of two scrap-fed electric arc furnace (EAF) production lines being installed to replace its existing blast furnace and basic oxygen furnace (BOF) steelmaking operations. “The $700 million project remains both on time and on budget, with a cumulative total of approximately $220 million spent as of Dec. 31, 2022,” Algoma notes.

In the meantime, the company says its revenue of $567.8 million in the final three months of last year represented a 46 percent decline from the $1.06 billion in sales in the comparable quarter of 2021. In its most recently completed quarter, Algoma reports a consolidated loss from operations of $65.7 million compared with income of $446.1 million in the comparable quarter of 2021.

“I have been disappointed by the level of production and shipments in the last two quarters,” Garcia says. “As such, my management team and I have been laser-focused on rectifying these shortfalls and we believe the challenges experienced over the prior quarters are now largely behind us, and our facilities are returning to normal production levels. We are also encouraged by the recent rebound in North American hot-rolled coil steel prices and continued robustness in plate pricing, which are supported by forward curves reflecting an expectation of stability as global demand recovers.”

Looking ahead, Garcia says, “We have invested strategically to capture market upside opportunities and continue to focus on the next chapter of our company as we transition to EAF steelmaking. We expect calendar 2023 to be more in line with our historical production levels.”

Regarding the EAF conversion project, Algoma says it has issued letters of credit totaling $48.1 million related to equipment fabrication and delivery. “Extensive work has been completed on the foundation and building erection has started, with EAF startup expected to occur in mid-2024,” the steelmaker states.

The revamped EAF steelmaking facility is designed to have an annual raw steel production capacity of approximately 3.7 million tons, with matching downstream finishing capacity. Algoma says it expects to reduce its current annual carbon emissions by approximately 70 percent.