Bustle pipe break scorches Essar Steel Algoma's bottom line

NEWS RELEASE

ESSAR STEEL

**************************** Second quarter 2010 fiscal performance reflects improvement in steel shipments

SAULT STE. MARIE - For the quarter ending September 30, 2009, Essar Steel Algoma reported shipments of 656,063 tons, up 64.5 percent from the previous quarter of 398,921 tons.

Sales for the quarter were $388.3 million as compared to $248.3 million for the quarter ending June 30, 2009, representing an increase of 54.4 percent.

EBITDA, a meaningful indicator of the company's profitability, was $19.7 million for the quarter compared to an EBITDA loss of $19.2 in the quarter prior, representing an improvement in finacial performance of nearly $40 million.

Overall, the company reported a net loss of $122.8 million for the quarter.

The loss was primarily attributed to lower steel prices and the impact of a foreign exchange loss of $71.9 million, which was a non-cash adjustment to net loss.

Financial performance was also affected by the bustle main failure on the company's No. 7 blast furnace which occurred on September 24, 2009.

No. 7 blast furnace has returned to normal operating levels.

Chief Executive Officer Amando Plastino remarked on the quarter: "We have weathered these challenging economic conditions and we will continue to focus on positioning the company to take advantage of future improvements in the steel markets."

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