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As a 36-year veteran of the steel mill that dominates Sault Ste. Marie, Ont., Steve Johnson didn’t lose any sleep Monday night after Essar Steel Algoma Inc. was granted creditor protection.
“If I look at the horizon, it hasn’t changed,” Mr. Johnson says. “They’re still making steel. They’re still making iron. We can tell by which smokestack is emitting fumes what’s going on.”
It is the third time in a quarter century that Algoma has been granted protection under the Companies’ Creditors Arrangement Act. The steel maker has interest payments of $25-million (U.S.) that it is unable to make amid a collapse in the price of steel and a court battle with an iron ore supplier.
The Algoma filing is also the latest instalment in an industry crisis that has led to mill shutdowns in North America and Europe, massive financial losses at major steel makers and petitions to governments to slap tariffs on steel from China, the main source of a flood of exports that has contributed to prices for benchmark steel plunging 40 per cent from 2014 levels.
Two of Canada’s three integrated steel makers – those that use blast furnaces to make steel as opposed to melting scrap in electric furnaces – are in CCAA protection.
U.S. Steel Canada Inc. filed in September, 2014, but its parent company, United States Steel Corp., effectively kicked the money-losing unit out of the house earlier this fall amid its own battle for survival and protracted negotiations with stakeholders that failed to lead to a restructuring deal.
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