Steel Mills
Essar Steel Algoma in Financial Straits
Written by Sandy Williams
November 4, 2015
Recent media reports indicate that Essar Steel Algoma may be heading for another return to insolvency as it struggles to meet its debts. According to media reports, the company has engaged a law firm and restructuring specialist to advise it and may file for insolvency by the end of the month.
Although Essar Steel Algoma has not confirmed the reports, spokesperson Brenda Stenta at Essar Steel Algoma provided SMU with the following statement.
“With regards to the current situation, we are operating our business as always with a focus on delivering the best quality product to our customers and the health and safety of our employees,” wrote Stenta.”
“Recent staff layoffs reflect difficult times in the international and domestic steel business overall. World steel prices have fallen dramatically over the past year as a result of overcapacity and reduced demand in the energy and mining sectors. In Canada, this pressure has been increased by the proliferation of low-priced steel flooding the market.”
The company laid off 100 employees last month at its plate and cold mills. Last week, salaried workers from USW Local 2742 were asked to vote on a work-share proposal that would allow two employees to share a job, avoiding complete job loss. Workers rejected the proposal in a 77-23 vote.
When Essar Steel Algoma was under court protection in July 2014, parent company Essar Global stepped in to provide funding. Soo Today reports that Essar Group has a plan to sell a 50 percent stake in Essar Oil to provide financing for its ailing steel segment abroad and in Canada. It is not confirmed that Essar will divert any of the funds of that sale to Algoma.
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
U.S. Steel sues Algoma over iron pellet shipments
U.S. Steel is suing Algoma over the Canadian flat-rolled producer's rejection of iron pellet shipments, arguing it has breached its contract.
August US mill shipments slip but still higher than last year
The American Iron and Steel Institute reported a decline in the monthly shipments of US mills from July to August.
TransPod, Algoma, Supreme Steel linkup anchors Canadian steel in high-speed transit build
The three Canadian companies have announced a strategic partnership to support the development of an ultra-high-speed transit line from Edmonton to Calgary.
Metallus, USW agree to tentative four-year labor deal
Metallus and the United Steelworkers (USW) have agreed to a tentative four-year labor contract.
ArcelorMittal Dofasco resumes cokemaking after emergency maintenance
The Canadian steelmaker reported on Sept. 30 that “urgent maintenance” was needed in its coke plant off-gas systems. The work required coke oven gas from the No. 2 coke plant to be flared for most of that week.