Steel Mills

Algoma IPO Nears with Legato Deal Expected to Close This Week

October 19, 2021

Algoma Steel’s initial public offering (IPO) is around the corner following shareholder approval of a deal between the Canadian steelmaker and Legato Merger Corp., a special purpose acquisition company (SPAC)

The merger between the New York-based SPAC and privately held Sault Ste. Marie, Ontario-based Algoma is expected to close this week, an Algoma spokeswoman said.

Algoma Legato shareholders approved the merger last week. The transaction will see Algoma acquired by the SPAC, which was created to take the private steelmaker public.

Once the deal closes, Algoma will go public and its shares will trade on the Nasdaq Stock Market and the Toronto Stock Exchange under the ticker ASTL, according to a press release.

The deal, announced in May, has been valued at $1.7 billion. Proceeds from the IPO are expected to help fund Algoma’s transition to electric arc furnace (EAF) steelmaking.

Algoma makes hot-rolled coil, cold-rolled coil and plate for a range of end markets including automotive, construction, energy and defense, according to the company’s website.

The company has two blast furnaces: The No. 7 has daily capacity of 8,400 tons of iron. The No. 6 has capacity of 3,000 tons of iron per day but is idle, according to SMU’s blast furnace status table.

Algoma is the latest in a host of steelmakers around the world to announce plans to switch to EAF steelmaking.

In North America, U.S. Steel has already replaced the blast furnace at its Fairfield Works in Alabama with an EAF. And the Pittsburgh-based steelmaker last month also announced plans to build a $3 billion EAF sheet mill with capacity of three million tons per year.

And U.S. Steel’s mill in Košice, Slovakia, is said to be considering an EAF as Europe looks to decarbonize. Other integrated steelmakers in Europe – Swedish steelmaker SSAB, for example – already have plans to replace their blast furnaces with EAFs.

The backdrop for such decisions: The steel industry accounts for 8% of total global CO2 emissions. And most developed countries have announced or begun implementing plans to significantly reduce those emissions.

Decarbonization is also expected to be a hot topic at the next Conference of the Parties meeting. Also known as COP26, the event will be held in November in Glasgow, Scotland.

The Conference of the Parties is the main decision-making body of the United Nations’ Framework Convention on Climate Change (UNFCCC).

By Michael Cowden, Michael@SteelMarketUpdate.com

Michael Cowden

Michael Cowden is managing editor for Steel Market Update. Cowden has covered the steel industry since 2007. He has since 2014 specialized in flat-rolled steel but has previously reported on steel long products, steel pipe and tube as well as aluminum. Before joining SMU, Cowden held reporting jobs at Fastmarkets AMM in Chicago - where he was involved in launching AMM's daily hot-rolled coil index, the Associated Press in Pittsburgh, and the Cambodia Daily in Phnom Penh. He has also worked as a copy editor and in marketing at the University of Chicago Press. Cowden has a BA in English from the University of Chicago and an MSJ journalism from Northwestern University’s Medill School of Journalism. Contact him at michael@steelmarketupdate.com or 724-759-7872.