Algoma Steel highlights new strategy after layoffs as it looks to lower costs

SAULT STE. MARIE – A day after his company announced plans to let go of more than 1,000 workers, the CEO of Algoma Steel said Tuesday he recognized the need to accelerate the company’s plan to lower its costs well before U.S. tariffs came into play.

Michael Garcia said in a media statement the strategy includes transitioning to electric arc furnace steelmaking, closing its blast furnace and coke-making operations early next year, and reshaping its product mix to better align with the demands of the Canadian market.

The federal and Ontario governments have also provided Algoma with $500 million in financing to help support the company during the market turmoil.

Industry Minister Mélanie Joly said Tuesday this money is meant to help the company pivot away from shipping steel to the U.S. Joly said this includes working with Algoma on new beam and plate steel plants for home construction and defence projects.

“We think that through these investments, there can be more jobs that come back to Algoma and which will be the case for many steel plants around across the country,” she said.

“And I know that this is not a perfect answer to those who are affected. But my point is we’ll continue to fight for these jobs.”

Joly said Algoma has started receiving orders from Irving and Seaspan Shipyards, something she attributes to federal “buy Canadian” policies.

The Conservatives have requested an emergency debate on the layoffs in the House of Commons on Tuesday.

In his statement, Garcia said before the Canada-U.S. trade relationship grew tense, his company held the view that the electric arc furnace was key to securing its future, modernizing its plant and broadening its product offerings.

Mike Da Prat, president of USW Local 2251, said 900 members of his union working at Algoma will be laid off starting in March, leaving workers anxious and stressed ahead of the holiday season. Bill Slater, president of United Steelworkers Local 2724, says about 150 of his members are affected.

The company reported almost half a billion dollars in losses last quarter as the 50 per cent tariffs on steel imposed by the U.S. effectively shut it out of the market.

“Without the opportunity to transition to the EAF, and the liquidity support provided by Large Enterprise Tariff Loan (LETL) from the federal government and province of Ontario, make no mistake, Algoma Steel would have experienced an even darker day — months ago, most likely its last,” Garcia said in the statement. 

This report by The Canadian Press was first published Dec. 2, 2025.

Companies in this story: (TSX: ASTL)