SAULT STE. MARIE – The $500 million in government loans to Algoma Steel Group Inc. has at least one analyst saying the cash could help set the company up for the longer term.
RBC analyst James McGarragle says the loans, and the company’s decision to speed up its transition to more efficient facilities, “positions Algoma to achieve long-term operational and financial stability.”
McGarragle says in a research note that the loan terms from the federal and Ontario governments look to be favourable compared with market alternatives, and includes a notable premium on the price of the share purchase warrants the federal government is getting as part of the deal.
He says Algoma’s move to accelerate its shift away from the emissions-intensive blast furnace and coke oven operations to electric arc furnaces also looks to be a strategically sound move, despite the added $70 million in costs.
Algoma started building the electric arc furnace infrastructure in 2021, thanks in part to an earlier $420 million in government funding, and made its first steel with the new system in July.
The company says that going forward, it plans to focus production on as-rolled and heat-treated plate steel along with select coil products, predominantly for the Canadian market.
This report by The Canadian Press was first published Sept. 29, 2025.
Companies in this story: (TSX:ASTL)
