Strings attached to the Sault steel plant support
Published Wednesday, January 9, 2019 6:20PM EST
Last Updated Thursday, January 10, 2019 7:57PM EST
It's a big day for the steel plant in Sault Ste. Marie.
Algoma Steel is about to get millions in government help to deal with the U.S. steel tariffs imposed last year.
Ottawa is making about $90-million in support money available to use as needed.
The province is also chipping in with a $60 million repayable loan for the company.
Federal Economic Development Minister Navdeep Bains was at the steel plant in Sault Ste. Marie on Thursday along with officials from the Ontario government to make the important announcement.
"Algoma will receive $90 million to support more than $600 million in capital investments." said Bains.
That federal funding, combined with $60 million from the province, gives Algoma Steel $150 million for modernization and efficiency projects.
"Our cornerstone asset, we will modernize to produce more through that asset, and we will produce grades we don't produce at this time mainly for the automobile industry." said Algoma Steel Chief Executive Officer Kalyan Ghosh.
Now both governments are loaning the money to steel producer.
Most of the federal investment will need to be repaid, while all of the funding from Queen's Park will be expected to be refunded back to the province.
Ministers from both levels of government say it's important that the company follow through with its commitment to grow, innovate, and be more environmentally sustainable.
“Yes, we're investing $90 million, but they have to own and commit to more than $600 million. So, it's about leveraging more money from the company in the long-term. This is a multi-year investment, so this is about job security in the long-term and having a strong and vibrant steel industry right here in the Sault." said Bains.
"Pensioners would have access to safe reliable pension moving forward. These are folks that put 20, 30, 40 years into Algoma Steel and they deserve protection. Secondly, it facilitates restructuring. We walk lock step with Algoma Steel through a process that we think is fair, reasonable and responsible in terms of protecting the environment and a plan for remediation of old sites." said Greg Rickford, Ontario’s Minister of Energy, Mines, Northern Development and Indigenous Affairs.
The steel company’s CEO says the timing of this investment is crucial, as the company is currently losing around a $1 million a day because of the U.S. tariffs.
"We should all understand that all these are capital investments. It will take two years to finish all the investment and reap the benefit, but that is necessary for Algoma to be sustainable for years and decades to come." said Ghosh.
Algoma Steel plans to make the necessary upgrades to capacity and ability to produce advanced grades of steel by 2023.
CTV News has learned that the federal government will make a major announcement in Sault Ste. Marie on Thursday at 2 pm.
It is set to announce up to $90 million in support for Algoma Steel, a financial commitment that is aimed at helping the producer deal with the American tariffs on steel and aluminum.
The Ontario government will also reportedly announce a separate provincial investment in Algoma Steel.
Economic Development Minister Navdeep Bains is to make the announcement at the Sault steel plant along with Ontario Northern Development Minister Greg Rickford.
A news conference is set and CTV News Northern Ontario's Lincoln Louttit will be there to bring us all the details as they become available.
Minister of Energy, Northern Development and Mines Greg Rickford visits Algoma Steel Inc. to announce a $60 million repayable loan from the provincial government.
Algoma Steel is the second-largest steel producer in Canada and the second largest private sector employer in Northern Ontario. Each year, Algoma Steel spends more than $1.2 billion on supplies, services and raw materials, including $120 million locally.
“Our government is committed to ensuring Algoma Steel remains competitive and sustainable in a tough market,” said Minister Rickford. “The investment announced today secures thousands of jobs and pensions and signals Northern Ontario is open for business.”
“This support will enable us to make important investments in new technology that will enhance our reliability, extend asset life and reduce our environmental footprint. We greatly appreciate the province’s investment in Algoma Steel’s long-term sustainability,” said Kalyan Ghosh, CEO, Algoma Steel Inc.
The investment is part of the purchase and restructuring of Algoma Steel, securing a $600 million capital investment at the steel making facility. The restructuring includes a long-term commitment to protect jobs and fund Algoma Steel’s three defined benefit pension plans, benefiting approximately 3,000 current and 6,300 former or retired employees.
Ontario has also negotiated an agreement that would require the new owners to identify and address past environmental contamination of the Sault Ste. Marie mill site. The new owners must also contribute $3.8 million annually over 21 years to continue this work.