Millions of dollars for Algoma Steel loan is a matter of sovereignty: Hajdu

OTTAWA — Algoma Steel Group Inc. is set to receive half a billion dollars in government loans to help it reorient its business away from the United States as the federal government argues supporting the domestic steel industry is a matter of Canadian sovereignty.

Ottawa’s $400 million in financial assistance will come from the Large Enterprise Tariff Loan program, a $10-billion tariff relief fund set up in March. The Ontario government will also provide $100 million to the Sault Ste. Marie, Ont.-based company.

The loans are to help Algoma Steel continue operations, limit disruption to its workforce and move to a business model that isn’t as reliant on the United States.

Patty Hajdu, minister for jobs and the federal government’s northern Ontario development agency, said in an interview Monday that steel forms the “backbone of sovereignty” in Canada amid shifting global trade currents.

Algoma CEO Michael Garcia said in a release that U.S. President Donald Trump’s ongoing 50 per cent steel tariffs have effectively closed the American market to Canadian steel.

That has made some of Algoma’s existing operations unsustainable and pushed up timelines for the company to transition to electric arc furnace steelmaking — typically a more energy efficient process than traditional blast furnaces. Algoma expects this transition to cost $987 million by completion.

That turnaround is also expected to help Algoma produce more of the kind of steel Canadian industry needs.

Hajdu said Canada can’t necessarily rely on foreign steel for the kinds of nation-building projects it’s putting on the table as part of a fundamental restructuring of the economy.

The U.S. tariff dispute and other global trade realignments have companies rethinking their footprints in some countries, she said, which makes supporting firms that are committed to Canada all the more crucial.

“Anchoring our steel industry with a Canadian-owned company … is actually super critical to our sovereignty and to the needs that the country is going to have in the defence procurement strategy and major projects,” Hajdu said.

The federal government has pushed to include more domestic steel in Canadian infrastructure and defence projects in a bid to support the beleaguered sector.

Ottawa says it will launch a new procurement plan in the coming weeks requiring domestic and foreign contractors to prioritize the use of Canadian materials, starting with steel and lumber, if they want to do business with the government.

In July, Prime Minister Mark Carney announced initial supports to shore up the domestic steel industry including tariffs on non-U.S. steel above certain quotas, and other duties particularly aimed at alleged steel dumping from China. The government has also offered employment insurance boosts and training to affected workers in the steel industry.

Carney said at the time that Canada had become too reliant on the United States — the destination for more than 90 per cent of Canada’s steel exports as of last year.

Statistics Canada said Friday that July’s activity in iron and steel mills and ferro-alloy manufacturing was 24.8 per cent below February’s level, before the U.S. first slapped 25 per cent tariffs on steel and aluminum imports.

The Trump administration ramped those tariffs up to 50 per cent in June, precipitating a 19.1 per cent monthly drop in activity in the sector in July.

Conservative Leader Pierre Poilievre said Monday that Carney had failed in his efforts to remove tariffs from the steel sector.

He told reporters at a press conference that the steel sector forms “the bones of an industrial economy and of our national security” and called for an end to the federal government’s industrial carbon tax to protect domestic producers.

Poilievre did not answer whether he thought Ottawa’s loan to Algoma was warranted and said he’d have to look at the details.

Hajdu wouldn’t say whether any other steel producers were in line for funding through the Large Enterprise Tariff Loan program, which is based on individual applications. But she encouraged other tariff-struck firms to tap the funding if they have similar ideas to reorient their business models.

“We remain open to working with whatever company and whatever sector needs that support to stay viable, to transform products or to find new markets,” she said.

Meanwhile, the United Steelworkers union said that while it welcomes the funding provided by the Ontario and federal governments, steelworkers are seeking guarantees and transparency.

“This support matters to our members and their families and protects jobs in the short-term in Sault Ste. Marie,” Marty Warren, USW national director, said in a press release.

“But workers and the public deserve transparency about the terms of this deal. These are public dollars, and the terms and conditions must be made public, not left behind closed doors.”

The union also highlighted that the package does not include commitments regarding the diversification of products. It said expanding the product capabilities of Algoma is important to safeguard future steel-making capacity and job security in the region.

— with files from Anja Karadeglija

This report by The Canadian Press was first published Sept. 29, 2025.

Companies in this story: (TSX:ASTL)

Craig Lord, The Canadian Press