The provincial and federal governments are supporting Essar Steel Algoma as it undertakes a major retrofit of its Sault Ste. Marie steel plant.
In July, the governments announced they would provide the steelmaker with $60 million in funding — $30 million each from the feds and the province — toward the multi-year, $240-million project. It’s the largest grant any government has provided the company in decades.
“This massive investment will help to ensure Essar Steel Algoma remains competitive for years to come, while building industry-leading capacities to produce a broader range of products as well as allowing for the increase in total steel output,” said David Orazietti, natural resources minister and the MPP for the Sault, in a statement.
Specifically, the funding will provide for upgrades in the state-of-the-art direct strip production complex, the adoption of enhanced automation technology in the plate and strip hot mill complex, and the installation of a new steel refining station.
Overall, the upgrades are expected to produce a wider range of steel grades, increase the steel quality, and increase production levels to meet demand. The work is expected to be complete in 2022.
The government funding, which comes from the Advanced Manufacturing Fund and the Northern Ontario Heritage Fund Corp., comprises one quarter of the investment the company is making into its Sault facilities.
Without it, said Brenda Stenta, Essar Steel Algoma’s manager of corporate communications, the upgrades wouldn’t have happened.
“We could not have executed this project without their support,” Stenta said. “So it is most definitely significant and very much appreciated.”
The massive project is a separate endeavour from the work already underway by Chinese company Sinosteel, which was contracted in 2013 to rebuild the through walls on each of the four coke-oven batteries attached to Essar’s blast furnace. The 40-year-old equipment is being replaced at a cost of $108 million over a four-year period.
This latest project is one of the steel plant’s most significant capital projects in recent years, although the company makes regular capital investments in the facility, Stenta said.
Examples include the construction of its direct strip production complex in 1997, and the commissioning of its cogeneration facility at a cost of $135 million in 2009.
But Stenta agreed that this $240-million capital investment shows commitment from the company to the future of its Northern Ontario operation.
“This investment will help sustain the jobs here at the steelworks and improve reliability, productivity, and our competitive position, which certainly bodes well for the future and the sustainability of our operation here in Sault Ste. Marie,” she said.
The work is expected to create at least 200 jobs, primarily in the skilled trades, over the course of the project. It will also help sustain the 2,500 direct jobs and 5,000 indirect jobs related to the industry across the province.
Various projects in the bundle will have staggered start times, and the work will be executed in parallel, Stenta said. Projects have varying durations, but the upgrades will be commissioned as soon as they’re completed.
Production at the steel mill will not be impacted by the changes, but the company should start to see the benefits of the improvements within a year, Stenta added.
