Essar Steel Algoma fixes blast furnace

Essar Steel Algoma has determined the cause of a problem at its #7 blast furnace that's adversely affected the company's steel production and shipments for the past two months.

Just-filed court documents related to the steelmaker's insolvency proceedings indicate that the issue resulted from improper distribution of raw materials in the furnace.

"This resulted in the formation of scabs.... causing production disruptions," said Brian Denega, the court-appointed monitor overseeing Essar Algoma's restructuring.

As of yesterday (Thursday, September 22), Denega said the blast furnace appeared to have responded favourably to steps taken to address the material-distribution issue.

The ironmaking problem brought steel production down to 145,000 tons in August, lowest since ESA filed for protection from its creditors in November, 2015.

This directly affected Essar Algoma's operating results over a two-month period.

The blast furnace issue was also blamed as one factor in the decision earlier this month to temporarily lay off more than 300 workers.

Essar Steel Algoma announced today that most of its secured lenders have agreed on plan for the Sault's steel mill, involving an  investment of up to US$425 million and a reduction of ESA's funded debt by about US$1.15 billion.

In a Toronto courtroom today, the company's protection under the Companies’ Creditors Arrangement Act was extended to January 31, 2017.

The company also got an additional USD $35 million of liquidity through an extension and amendment of its existing debtor-in-possession financing arrangement.