Steel Mills

Algoma Board OKs Two New EAFs, Startup Set for '24

November 11, 2021

The board of Canadian flat-rolled steelmaker Algoma has approved the construction of two new electric arc furnaces (EAFs) with combined steelmaking capacity of 3.7 million tons per year.

The new EAFs are expected to come online in 2024 and to replace the Sault Ste. Marie, Ontario-based company’s blast furnaces and basic oxygen furnaces.

Algoma

“We believe that today’s strategic decision to transition Algoma to electric arc steelmaking represents a win for all of our stakeholders,” Algoma CEO Michael McQuade said in a statement on Thursday, Nov. 11.

“It is designed to transform Algoma into a more agile and profitable company, positioned for long-term growth as an economic driver and employer of choice in our community,” he added.

The switch to the EAF route, which will lower Algoma’s CO2 emissions by an estimated 70% (3.3 million tons per year), also depends on more electricity becoming available, the company said.

Algoma said it would in addition add new vacuum degassing capability so that it could make a wider range of plate products. The company make makes hot-rolled and cold-rolled coil as well as plate.

Lower CO2 emissions aren’t the only benefit of EAF steelmaking. Algoma expects lower conversion costs, lower carbon tax liabilities and lower maintenance spending compared to traditional integrated steelmaking.

The company also expects that the EAF route will allow it the flexibility to match production to market conditions. And having two EAFs will reduce the risk of a single furnace failing – something Algoma is currently exposed to.

Algoma has two blast furnaces: The No. 7 has daily capacity of 8,400 tons of iron. The No. 6 has capacity of 3,000 tons of iron per day but is idle, according to SMU’s blast furnace status table.

The company announced in May that it planned an IPO, proceeds of which could be used to fund its transformation to EAF production. That IPO occurred last month, and the company has since announced a joint venture with scrap recycler Triple M Metal to source prime scrap and other iron units for its EAFs.

Algoma is hardly alone in switching to the EAF route or adding new EAF capacity. New EAFs have been announced or are being considered across North America – and around the world. That has raised concerns about a potential shortage of prime scrap in coming years should supplies of the raw material fail to keep pace with a big projected increase in demand.

By Michael Cowden, Michael@SteelMarketUpdate.com

Michael Cowden

Michael Cowden is managing editor for Steel Market Update. Cowden has covered the steel industry since 2007. He has since 2014 specialized in flat-rolled steel but has previously reported on steel long products, steel pipe and tube as well as aluminum. Before joining SMU, Cowden held reporting jobs at Fastmarkets AMM in Chicago - where he was involved in launching AMM's daily hot-rolled coil index, the Associated Press in Pittsburgh, and the Cambodia Daily in Phnom Penh. He has also worked as a copy editor and in marketing at the University of Chicago Press. Cowden has a BA in English from the University of Chicago and an MSJ journalism from Northwestern University’s Medill School of Journalism. Contact him at michael@steelmarketupdate.com or 724-759-7872.