Steel Mills
Algoma Posts Loss in Fiscal Q4, EAF Project Over Budget, Delayed
June 21, 2023
Algoma Steel said its transition to electric-arc furnace (EAF) steelmaking would be delayed and over budget as it reported a loss in its fiscal fourth quarter.
The Sault Ste. Marie, Ontario-based steelmaker said in a statement on Wednesday after markets closed that it estimated the project would exceed its original budget by Canadian $125 million to C$175 million (US$95 million to US$133 million). Among the reasons for the overrun were higher costs for materials and skilled labor as well as currency fluctuations.
Algoma also said that supply-chain disruptions, including shortages of certain microchips, were responsible for delaying the commissioning of the first EAF to calendar year-end 2024.
The company announced in November 2021 that its board had approved a plan to transition away from steelmaking via blast furnaces and basic-oxygen furnaces to making steel via two EAFs.
Algoma swung to a C$20.4-million loss in its fiscal Q4 ended March 31 from net income of C$242.9 million a year earlier on revenue that tumbled 28% to C$677.4 million.
The steelmaker said that the loss resulted primarily from (1) lower steel selling prices, (2) higher costs from replacing internally produced coke with purchased coke, and (3) an increase in prices for metallurgical coke and coal.
The company reported that steel revenue was C$609.2 million in its Q4 vs. C$879.9 million a year earlier. Revenue per ton of steel sold was C$1,185 (US$900.30) compared to C$1,721 in the same comparison.
Michael Garcia, Algoma’s CEO, said the results were in line with the company’s previously disclosed outlook.
“Following a period of dynamic commodity prices and operational improvements, the quarter saw plate and strip operations return to normal production levels,” Garcia said in the statement.
Looking ahead, he expects to continue this momentum into fiscal 2024, “with expected strong first-quarter shipments and operating cash flow.”
Algoma in addition announced that Mike Panzeri had recently joined the company as SVP of production after serving as COO at JSW Steel USA Ohio, a sheet mill in Mingo Junction, Ohio. Panzeri will report directly to CEO Michael Garcia, the steelmaker said.
By Ethan Bernard, ethan@steelmarketupdate.com
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