Steel industry uncertainties aside, plans to turn the Port of Algoma into a major distribution centre for central North America are proceeding full steam ahead.
Anshumali Dwivedi, Port of Algoma's chief executive officer, tells SooToday that the $4.3 million initial planning/consultation phase of the Sault's top economic development priority is complete and a report is expected to be presented to City Council late next month.
"It is viable as a stand-alone project," Dwivedi says.
His report to the city will project 1,350 full-time construction jobs during the four-year port construction project.
Permanent direct employment at the Port of Algoma is projected around 250 jobs, with 1,200 or more additional spin-off positions at port-related logistics, support and transportation services firms that are expected to cluster around the port on nearby heavy industrial land.
Another part of the initial phase of the project has been consultations with local First Nations.
Today, the Port of Algoma and Garden River First Nation will sign what both parties regard as an historic reconciliation and prosperity accord.
On the dignitary list for today's signing are:
- Chief Paul Syrette, Garden River First Nation
- Anshumali Dwivedi, CEO, Port of Algoma
- David Orazietti, minister of government and consumer services
- Member of Parliament Terry Sheehan, Sault Ste. Marie
- Ontario Regional Chief Isadore Day
- Dr. Eddie Benton Banaise, grand chief
- Chief Reginald Nigonabe, chair, North Shore Tribal Council
- Don Mitchell, chair, Sault Ste. Marie Economic Development Corp.
- Deputy Grand Chief Glen Hare, Anishinabek Nation
"Hopefully by next week we are looking at signing a unity accord with Batchewana and the other First Nations chiefs," Dwivedi says.
“I have briefed the prime minister on the Port of Algoma and the importance of it," Sault MP Terry Sheehan told SooToday last week.
Sheehan sees the proposed port as far more than just a carrier for Essar Steel Algoma.
He sees considerable opportunities related to the Ring of Fire - Northern Ontario's massive proposed chromite mining and smelting development.
"We see a huge opportunity, because shipping something by boat is not only cheap but also great for the economy. It’s one of the best ways to not create a carbon footprint," Sheehan says.
"That’s really, really important and my Northern Ontario colleagues support me on that."
Port of Algoma Inc. came into being in September 2014, when as part of its refinancing deal, Essar Steel Algoma Inc. spun off its aging Sault dock as a separate business entity.
The port is 99 percent owned by Essar Ports, a subsidiary of Essar Steel Algoma's parent company, Essar Global Fund Ltd.
The remaining one percent of the Port of Algoma is owned by the City of Sault Ste. Marie.
Dwivedi is quick to point out that Port of Algoma operates entirely separately from Essar Steel Algoma.
"While Essar Steel Algoma is going through a restructuring process under CCAA (Companies' Creditors Arrangement Act), a court-determined process, we are at arm's length from them and we operate independently from them," Dwivedi says.
He's nonetheless watching the local steel mill closely because he expects that even with a new, diversified customer base attracted to a rebuilt port, Essar Steel Algoma will remain the largest user.
Is it economically viable to rebuild Essar's existing docks and improve 440 acres of adjacent industrial land if the local steel mill closes?
"It would be imprudent for me to comment on that scenario because the steel plant is going to be there," Dwivedi says. "The operations are going to be there. The steel markets have picked up. It would be for Essar Steel to comment on how they're looking. In terms of our traffic study, we've taken Essar Steel as the base volume. We've seen what else can be added."
Results from a shipping traffic study to be presented to City Council next month cover three scenarios.
In the first scenario, the economy would remain pretty much as it is right now, with very limited growth.
In the second scenario, the economy would gradually emerge from the current down-cycle and stabilize.
The third scenario projects high growth, with considerable new investment attracted to the Sault.
Under the high-growth scenario, Essar Steel would continue contributing close to five million tonnes a year of base cargo, with 5.5 million tonnes of additional cargo from other customers.
Most of the new shipping, Dwivedi says, would be fibre-related material generated by the forestry sector.
“The Sault would be very nicely located for a large wood pellet opportunity,” he says. “The port would have the ability to send out trans-Atlantic cargos. Western Europe is the big market for pellets. The Sault certainly becomes much more attractive as a destination if you had a port here, which could bring down your logistics costs.”
He also sees major opportunities for our port in the aggregate industry.
Smaller but not insignificant volumes of container or project cargo are also possible.
Some of this business, Dwivedi sees being pulled from long-haul land traffic redistributed for short-haul land transportation from the Sault, creating local trucking jobs.
Dwivedi has been busy building partnerships for the new port.
The Port of Antwerp in Belgium has been particularly helpful.
“Antwerp helped with our traffic study. They are providing us with business contacts. They've connected us to some companies which are doing trans-Atlantic movements and we're trying to see how we can put the Sault on that map now,” he says.
Dwivedi has also been talking to the Port of Cleveland, hoping to sign a co-operation agreement later this year.
And he’s been looking closely at Hamilton Ontario, where a major new grain terminal is being built, and at a smaller-but-promising port near Montreal.
Now that the Port of Algoma’s initial planning phase is complete, it will embark on a brief second phase.
“It’ll be just a few months, where we put together the implementation package for the third phase, which is the physical construction.”
Dwivwdi says federal cash will be sought for the port, with a matching contribution from the Province of Ontario.
The idea is to have a "shovel-ready" project ready for anticipated federal infrastructure financing.
“That process is in a critical stage,” he says. “You wait a few weeks and that process, hopefully by late May or early June, should be much further advanced and hopefully into a different orbit.”
Dwivwdi says the port will also be looking for input from City Council when it presents its first-phase report next month.
“The intention is that by early 2017 we should be a position to start construction on the ground,” he says. “We will, of course, take feedback from the City Council once we get an opportunity to present this to them. Also, we will watch the situation at Essar Steel Algoma. Hopefully it should be a good outcome, finally.”