Essar Steel Algoma Granted Temporary Pension Relief

Essar Steel Algoma was granted temporary pension relief on Friday by the Ontario government. The company will defer special pension payments for the 12 months beginning December 2012 and ending November 2013.

Low interest rates have caused Essar Steel Algoma’s pension contribution requirement to more than double from those made in previous years. The increased contribution, along with declining steel prices, increased borrowing costs and one-time operational issues, led Essar to seek help from the province. Essar Steel Algoma will continue to pay ongoing pension service costs for its defined benefit pension plans during the year.

Essar Steel Algoma CEO Kalyan Ghosh commented, “This temporary relief, in combination with continued cost-cutting, operational improvements, improving industry fundamentals and lower raw material costs will enable Essar Steel Algoma to manage its liquidity through this difficult cycle. In the coming months Essar will meet with its unions, pensioners and other pension stakeholders to explore a medium-term pension funding strategy.”