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Algoma Steel’s bold plan to become Canada’s greenest steelmaker

All coal use to be phased out eventually, if the company pivots to electric-arc steelmaking
2021-05-25 Algoma Transformation
How the Legato merger is expected to herald a transformation of Sault steelmaking

Algoma Steel is hoping its just-announced $1.7 billion merger deal with New York-based Legato Merger Corp. will allow it to reduce carbon emissions equivalent to decommissioning an entire coal-power plant, helping transform the Sault steelmaker into Canada's cleanest steel producer.

After 120 years of blast-furnace production, Algoma is planning a bold transformation to electric-arc furnace (EAF) technology, using high-current electric arcs to melt steel scrap into liquid steel, investors were told today.

Under the half-billion-dollar proposal, use of coal and the company's historically dangerous coke ovens will eventually become things of the past.

Use of Iron ore feedstock would be replaced by readily available regional supplies of scrap steel.

"Looking ahead, we are exploring the possibility of converting steelmaking in Sault Ste. Marie to electric-arc steelmaking technology," Algoma chief executive officer Michael McQuade said during a conference call.

Electric arc furnace steel production now makes up about 70 per cent of North American steelmaking and continues to grow globally, McQuade said.

"There are significant benefits to EAF steelmaking when compared to the traditional integrated blast furnace model, including reduced conversion costs, less maintenance capital expenditure, significant reduction in greenhouse gases and improved productivity." 

"The company is in the advanced stages of planning for this high-return-on-investment conversion, but has not yet reached a final investment decision," said Legato's CEO David Sgro.

If it proceeds, the technology pivot would turn Algoma Steel into one of the greenest producers of steel in North America, allowing greater flexibility for the Sault mill to improve product mix and reduce production costs.

Algoma Steel's production capacity could grow to more than three million metric tons a year, the company said in a written proposal.

Carbon emissions could be cut approximately 70 per cent a year – an annual reduction of three million tonnes in carbon dioxide.

"This potential transformation could be a significant contributor to our federal reduction targets," McQuade told investors today.

Expected reductions would match 11 per cent of Canada's 2030 Paris Agreement target and 100 per cent of Ontario's 2030 target.