Construction has begun on a years-long project to convert the local steel plant from traditional steelmaking to become one of North America’s leaders in manufacturing ‘greener’ steel.
On Monday, Algoma Steel Inc. announced it had finalized a $220-million financing deal with The Canada Infrastructure Bank toward its plans to convert to electric arc furnace (EAF) steelmaking.
“We have started construction now,” said Brenda Stenta, manager of communications and branding for Algoma Steel Inc. during an environmental open house held Monday afternoon at the Northern Community Centre.
Stenta said construction on the $700-million project is expected to take about 30 months to complete.
”Once they are commissioned and product certification is complete we intend to operate in a hybrid mode for a number of years until we have full power supply to allow us to operate both furnaces at the same time,” said Stenta.
The federal government has made a $420-million commitment toward the project, which is expected to result in a 70-per-cent reduction of Algoma Steel’s carbon emissions.
Stenta said the conversion to EAF technology will allow the company to be more scalable, allowing it to adjust to changes in the market like demand or fluctuations in the price of steel.
”It also eliminates the risk associated with a single furnace,” said Stenta. “If Number 7 blast furnace were to have a hiccup and couldn’t operate for two weeks it essentially takes us out of the market. This eliminates that risk because we have two furnaces and it increases our steel capacity.”
Stenta said once the new furnaces are built they will also require less capital to keep them in operation compared to the work that would be needed to keep Number 7 going.
“It gives us that security and it’s just a much more cost-effective model and makes us much more competitive,” she said.
Once both of the arc furnaces are at full power the company is expected to begin decommissioning the Number 7 blast furnace, closing the book on more than 120 years of traditional steelmaking in Sault Ste. Marie.
“Somewhere between 2026 and 2029 we expect to be in full EAF mode,” said Stenta.
Asked if there is enough electric power on the grid to power the two furnaces, Stenta said they will eventually be brought online in two phases.
“We understand the grid already has the power, it’s just a matter of getting it to us,” said Stenta. ”That first step will be the transmission upgrade, working with Sault Ste. Marie PUC and getting that power from Third Line down to the plant.”
Stenta said about 70 per cent of the flat steel currently manufactured in North America is made using EAF methods.
“Here in Ontario we have a much greener grid than any of those other people have. So you take this process and you pair it with the green low-carbon grid we have here in Ontario — we will be one of the leading producers of green steel in North America,” said Stenta. “We already have customers who are doing sustainability studies and looking at their supply chains and they want to know what their (carbon) footprint is. We are part of their footprint, so when we can provide them with green steel, it gives us a competitive advantage.”
Another benefit of the project, said Stenta, is that the company will be dramatically reducing its emissions at the same time the federal government is expected to increase the cost of carbon for large manufacturers.
“So the cost of carbon will be significantly reduced for us if we go this way, whereas if we stay the course it is way more capital intensive, the cost of carbon is higher, we don’t have the ability to offer the green steel that our customers are demanding,” said Stenta. “It’s a move that we need to make and it makes sense on a whole host of fronts.”
About 500 construction jobs are expected to be created for the project, said Stenta.
Once it is completed and the plant is in hybrid mode with both EAF and the Number 7 furnace in operation, Stenta said the company may see a temporary increase in the number of workers at the plant, but that won’t last once the traditional furnace is taken offline.
“Eventually we expect it will be at a lower level,” said Stenta of the number of jobs expected at the plant. “We don’t really have a definitive number at this time as to what that transition looks like.”
Stenta said some workers will be retrained to operate under the EAF method, while some others may be headed for retirement right around the time Number 7 goes dark for good.
“The rate of retirement is actually quite high within our workforce,” she said.
The environmental open house is held annually by the company to share information with the public about Algoma Steel’s environmental management program.
Monday's event included information on the company’s switch to EAF technology, as well as other efforts like a greening of parts of the Algoma Steel property. The years-long project is already underway with the expansion of a berm along the waterfront.
“The intent is to vegetate that berm with native species and we are partnering with Sault College and their forestry program because they not only grow the species but also have the expertise,” said Stenta.
A portion of the fill being used to expand the berm is being taken from the site of the new twin-pad arena being built at the Northern Community Centre.
Algoma Steel plans to add greenery to areas at the west and the northwest of its property.
“Those are a couple of years out. We are doing some other groundwater work — it’s a pretty extensive project,” said Stenta. “It’s also a much more attractive work environment for our employees and for our neighbours, whether they be across the river or right next door.”
Stenta said the company will hold another environmental open house in the new year because of the new environmental compliance approvals that are required for the conversion to EAF technology.