Essar pushes government hard on deep-water port

A deep-water port in Sault Ste. Marie is vital to Essar Steel Algoma's continued growth, says Jatinder Mehra, chief executive officer of parent company Essar Steel Holdings Ltd.

While production is currently down to about 40 percent of the Sault mill's capacity, Mehra says the company wants to be ready when the demand for steel rises again.

He says that an effective economic renewal package from government should begin to renew infrastructure like the Sault port while steel demand is low.

That way, Essar Steel Algoma and its neighbours who rely on marine access to receive raw materials and to ship their products will be able to ramp up quickly and be first to respond as markets return.

"Whatever one may do is going to take time," Mehra said during a media conference at Essar's Sault boardroom on Friday.

Armando Plastino. Essar's local chief operating officer, said that a deep-sea port is critical, not only to Algoma's operations but also to the expansion initiatives of neighbouring industries in Sault Ste. Marie and all over Northern Ontario.

"We've been discussing this expansion of the port with all levels of government and there is some interest to help us," Plastino said.

The existing port must be dredged again to bring it to 28-foot depth and the docks need to be expanded to allow for more marine traffic, he said.

"For every 54 inches of depth you lose on a lake freighter, which is roughly 800 feet long, you lose about 14 to 15 thousand tonnes of carrying capacity," Plastino said. "That's about a third of their 45- or 50-thousand-tonne carrying capacity."

Essar has an obligation to service neighbouring industries such as Tenaris Algoma Tubes and others, Plastino said.

"We are currently constrained with both the port size and logistics," added Mehra. "We are not export-viable at this time."

Mehra said that products manufactured here lose their competitive advantage when the expense of transferring them from ship to ship must be added, because the marine carriers needed to transport them to market can't get to the port at Essar Steel Algoma.

"Our traffic will go from roughly 500 vessels a year to 1,500 vessels a year," said Plastino. "If we grow our output, we will obviously need to grow our export capability as well."

Mehra said Sault Ste. Marie has huge potential to be developed as a hub for industry, manufacturing and transportation.

He said a deep-water port in the Sault would be a major facilitator and stimulant of real and sustainable growth in the local and regional economy.

Essar is continuing to meet with all levels of government to spur this development, said Plastino.

The company hopes to see some agreements in place soon to begin the project.