History
The company was incorporated in 1901 and construction of the steelworks started in February of that year. [2] On February 18, 1902, the first Bessemer converter was put in operation using pig iron made from the Helen mine, owned by Algoma. The first rails were produced by the complex in May 1902. However, blast furnaces for pig iron manufacture were not completed at the site until 1904. Unlike most other steel producers, Algoma had no access to local coal, forcing it to import coal and coke from the United States. The Bessemer process was felt to produce steel that was well-suited to manufacture of rails, which was the Algoma complex's primary product for the first two decades of its existence.
Shortly after founding Algoma, Clergue's various financial operations suffered reverses, having to shutter operations in 1903, causing the 1903 Consolidated Lake Superior riot. After restructuring, he lost control of the Sault Ste. Marie complex, being replaced as general manager in 1903 and by 1908 was no longer on the company's board of directors. Initially the company specialized in manufacture of rails for Canadian railways, but this soon became a dead-end as railway construction passed its peak.
During the First World War Algoma made steel for artillery shells but after the war continued to rely on rail production. The necessity of importing ore and coal from the United States due to the low quality of Canadian iron ore, as well as the absentee owners' greater interest in annual dividends than building a viable industrial complex, held back Algoma during the 1920s. At the height of the Great Depression, the company was insolvent and in receivership until Sir James Dunn gained control in 1935 and restored it to profitability. Dunn's policy of never paying a dividend to stockholders, coupled with extensive modernization and expansion during the Second World War, and an extended period of steel demand up until the mid-1950s, allowed Algoma to expand and become a more balanced steel producer.
Dofasco takeover and 1990-92 bankruptcy
Algoma Steel was publicly traded on the Toronto Stock Exchange in the 1980s when Dofasco bought the company from then controlling shareholder Canadian Pacific Limited. [3] Canadian Pacific Ltd. owned 53.8% and they agreed to a total purchase price of CAD $560 million. At the time of the transaction, it was reported that Algoma had 9,000, largely unionized, employees. Dofasco owned Algoma from 1988 to 1991, making the combined company the largest steel producer in Canada. However, Dofasco wrote-off their equity investment less than three years later as Algoma entered a prolonged restructuring process. A strike at Algoma both reduced cash flows and increased costs, contributing to the financial stress of the company. [4] [5]
The high value of the Canadian dollar coupled with competition from mini mills, lower-cost and currency-strong Asian countries and dumping by Japanese companies has hurt Canadian primary steel producers. In 2002, the company emerged from bankruptcy protection for the second time in a decade, having previously gone into bankruptcy in 1990. Denis Turcotte, the President and CEO, was largely credited with Algoma's resurgence, making it one of the most efficient steelmakers in North America. [6]
Algoma Steel announced on August 3, 2005, that the company was no longer for sale after a $64.7 million second quarter profit. The company stated that they are going to focus on value-enhancing, non-sale alternatives. Algoma also announced a special dividend of $6.00 per share payable on August 31, 2005, to shareholders of record on August 17, 2005, and a normal course issuer bid for up to 3.3 million shares.
On February 8, 2006, Algoma Steel announced a $55 million profit for their fourth quarter ending December 31, 2005. As a result of this and redemption of their 11% notes on January 9, 2006 the company declared themselves debt free and had an operating surplus of over $400 million in cash. This cash surplus attracted the attention of some shareholders who wanted to see the cash distributed as dividends, echoing Algoma's historic problems almost exactly a century earlier.
Essar Global takeover and subsequent restructuring
On 15 April 2007, India's Essar Global made an offer to acquire Algoma Steel Inc. for $1.85 billion CAD in cash. [7] It was announced on 20 June that Essar had completed its purchase of all outstanding shares. [8] [9]
On June 23, 2008, following its purchase by Essar Group, Algoma Steel Inc. announced that its name had been changed to Essar Steel Algoma Inc. This came along with a logo change to the Essar Steel company logo.
On May 26, 2017, Essar Steel Algoma was rebranded once again, simply called Algoma. The announcement was made in Sault Ste. Marie, Ontario. For legal purposes, the factory will remain "Essar Steel Algoma Inc." until the company emerges from insolvency protection. [10]
In May 2021 Algoma had a yearly production capacity of 2.8 million tonnes of steel, for which it employed around 2,700 people. [1]
