Steel Mills
Algoma Reports Strong Quarter, Eyes EAF Conversion
Written by David Schollaert
August 20, 2021
Algoma Steel Inc. reported strong results for its fiscal first quarter ended June 30, setting the stage for its parent company, Algoma Steel Group Inc., to become a public company later in 2021. Algoma reported net income of $214 million Canadian ($166.6 million U.S.), nearly double its earnings in the prior quarter. The Ontario-based steelmaker attributed its strong financial performance to increased shipment volumes, strong steel demand and improved selling prices.
“The extended strength we see in the steel market positions us favorably for our pending return to public markets,” said Michael McQuade, Algoma’s CEO.
Algoma’s shipments surged by 47% to 610,000 tons in the quarter, compared to 416,000 tons during the same period last year. Steel revenue of C$765 million ($595.7 million) was up 124% from one year ago and up 21% from the prior quarter.
The steelmaker confirmed that its proposed conversion from integrated to electric-arc furnace (EAF) production is on track. If completed, finished steel capacity would increase by roughly 700,000 tons, while total carbon emissions would decrease by 70% or 3 million tons of CO2 per year by 2030. EAF production would add C$193 million ($150 million) to the company’s adjusted earnings by 2024/2025, the company said.
“In addition, last month’s announcement of the Government of Canada’s anticipated C$420 million ($327 million) in support for our proposed transition to electric arc furnace technology, together with up to C393 million ($306 million) of new equity capital that may be provided by our merger with Legato Merger Corp., is expected to make our sustainability transformation possible,” added McQuade.
Permitting and commissioning of the new dual EAFs is tentatively scheduled for 2024, with completion and certification planned for 2025.
Note: 1 CAD = 0.78 USD
By David Schollaert, David@SteelMarketUpdate.com
David Schollaert
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