$300-million upgrade to focus on Algoma Steel's DSPC, plate mill

A $300-million modernization drive planned for Algoma Steel Inc. will focus primarily on the steelmaker's direct strip production complex (DSPC) and its plate and strip mill, chief executive officer Kalyan Ghosh told reporters Friday.

Ghosh described the DSPC – the only facility in Canada that converts liquid steel directly into steel coils – as being Algoma's "jewel in the crown."

"That is a 20-year-old complex and we are trying to modernize it so that it produces more and new types of steel," he said.

"The second type of modernization is primarily in the plate and strip mill, which is a very old complex. We are modernizing it so we can produce more plate. We are the only plate manufacturer in Canada. It is a strategic product for any country. We want to increase the plate production. We want to produce plates for the [Canadian] navy and also for bridges and other infrastructure projects, which we can produce today."

Background information provided to journalists Friday said that additional modernization initiatives like Algoma's advanced manufacturing supercluster will involve deploying artificial intelligence in virtual product trials, leading to new steel grade capability.

Ghosh was speaking at a Sault Ste. Marie news conference announcing the sale of the steel mill and other assets to a freshly minted company with an old name.

The new entity acquiring the Sault's steelmaking operations is called Algoma Steel Inc. – the same name used by the steel mill before it was acquired in April 2007 by India's Essar Group.

Controlled by a consortium of the steelmaker's creditors – term lenders and senior noteholders – the new company stood proud and unassisted Friday for the first time in three years, free of all restrictions imposed by the Companies' Creditors Arrangement Act.

The old Essar Steel Algoma, now referred to as Steelco, will remain under insolvency protection until June 30, 2019.

All of Steelco's 2,900 employees have been invited to stay on with the new company.

The steelmaker hired 242 people during the first six months of this year.

With 700 workers eligible to retire, it expects to hire more than 200 new employees over the next three to five years.

Ghosh said that the company needs fresh blood at all levels: skilled trades, labourers, metallurgists, engineers, designers,

"Although we are able to get labour here, we are short of tradesmen and we are working with the city, the colleges and Algoma U to find out how to get better-trained people going forward," he said.

Asked whether Algoma Steel will be affected by General Motors' announced plan to cease operations at its Oshawa plant, Ghosh said: "We don't directly supply to General Motors. We have taken this conscious call not to be highly dependent on any sector."

Ghosh encouraged GM Oshawa employees to apply for work at Algoma Steel.

Both the Sault Star and CTV pushed Ghosh hard on how he intends to ensure that the steel mill never again requires insolvency protection.

"What is important in a cyclical business like steel, we need to have the right balance sheet. We need to have the right cash so that if there is a downturn that comes up in the coming years, we are able to sustain it," he said.

The following are directors of the new company:

Andy Harshaw

Retired in in December, 2016 as chief executive officer at ArcelorMittal, the world's largest steel producer.

Mike McQuade

Former president of Stelco/ U.S. Steel Canada, who led a financial restructuring and sale that separated Stelco from U.S. Steel.

Michael Alexander

Managing director at Marathon Asset Management, a New York-based investment manager.

Michael Bevacqua

Managing director in distressed and special situations and head of the restructuring team at Bain Capital Credit's Boston office.

Brad Sweeney

Managing director at Barclays, where he heads the U.S. distressed desk analyst team.

Andrew E. Schultz

Independent director for a variety of restructured companies across a wide range of industries including Niagara LaSalle Steel. Advisor and consultant to numerous boards and companies, specializing in distressed or underperforming assets.

Kalyan Ghosh

President and chief executive officer, Algoma Steel Inc.