Algoma Steel
From Wikipedia, the free encyclopedia
See also Algoma (Disambiguation)
 |
This article is missing citations or needs footnotes. Using inline citations helps guard against copyright violations and factual inaccuracies. (March 2008) |
| Algoma Steel, Inc. | |
|---|---|
| Type | Public (TSX: AGA) |
| Founded | 1902 |
| Headquarters | Sault Ste. Marie, Ontario, Canada |
| Key people | Sir Francis Clergue, Founder |
| Industry | steel |
| Revenue | ▲ 239 million CAD (2005) |
| Employees | 3100 (2007) |
| Website | www.algoma.com |
Algoma Steel Corporation (TSX: AGA) is an integrated primary steel producer located on the St. Marys River in Sault Ste. Marie, Ontario, Canada. Its products are sold in Canada and the United States as well as overseas. Algoma Steel was founded in 1902 by Francis Clergue, an American entrepreneur who had settled in Sault Ste. Marie. The company emerged from bankruptcy protection in 2004. In April 2007, Algoma Steel was purchased by India's Essar Group for US$ 1.63 billion, continuing operations as a subsidiary.
Contents |
[edit] History
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 1906. 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 primary product for the first two decades of its existence.
Shortly after founding Algoma, Clergue's various financial operations suffered reverses and he lost control of the Sault St. 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. Low quality of Canadian iron ore and the necessity to import ore and coal from the United States, as well as absentee owners more interested 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 controls up until the mid 1950's, allowed Algoma to expand and become a more balanced steel producer.
From 1988 to 1991 Algoma was owned by Dofasco, making the combined company the largest steel producer in Canada. However, a strike at Algoma and other Dofasco subsidiaries in 1990 caused Dofasco to abandon ownership.
[edit] Steelmaking facilities
Algoma currently has a capacity of 2.8 million tons per year. Primary steelmaking facilities include a blast furnace, three coke batteries, two, 260 short ton basic oxygen furnaces, with two ladle metallurgy stations for refining and alloying. Algoma has a direct strip production complex manufactured by Danieli of Italy, which casts strip directly and then rolls it to finished strip in the range of 0.047 inches to 0.625 inches in thickness, and widths to 64 inches. Algoma also operates a hot strip mill, a plate mill, and a cold strip mill. Algoma also manufactures welded structural beams.
[edit] Current status
Algoma currently is the third largest steel producer in Canada (behind Dofasco and Stelco) both of which proved stronger corporate entities than Algoma. It remains the largest employer in Sault Ste. Marie and currently has 3150 employees at the main plant. Algoma now produces steel strip (i.e. plate and sheet type) which forms its main money maker along with its blanking operations and welded beams.
Artificially-inflated value of the Canadian dollar coupled with competition from minimills, 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 steelmaker in North America. [1]
In 2004, Algoma entered into the process of purchasing Stelco, which is based in Hamilton, Ontario, with a plan to run the two companies as one large integrated producer. On February 9, 2005, after a fourth quarter of record profit, Algoma withdrew from its purchase intentions, citing risk.
Algoma Steel announced on August 3, 2005, that the company was no longer for sale after a $64.7 million dollar 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 dollar 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 has declared themselves debt free and has an operating surplus of over $400 million dollars in cash. This cash surplus has attracted the attention of some shareholders who would like to see the cash distributed as dividends, echoing Algoma's historic problems almost exactly a century earlier.
In February 2006, Algoma announced it was participating in a joint venture with SIAG Corporation of Germany for manufacture of towers for wind turbines. The capacity of the plant, to be located next to the Algoma site, will be 180 towers per year.
In October 2006, Algoma Steel was awarded by the Ontario Power Authority to build, own and operate a cogeneration power plant utilizing by-product fuels such as BFG and COG; Algoma Steel has founded a limited partnership company called Algoma Energy LP to own and operate the cogeneration facility. The facility's contract capacity was said to be 63MW.
On 15 April 2007, Essar Global made an offer to acquire Algoma Steel for 1.85 billion CAD in cash. [2] It was announced on 20 June that Essar had completed its purchase of all outstanding shares [3].
[edit] References
- Duncan McDowall, Steel at the Sault: Francis H. Clergue, Sir James Dunn, and the Algoma Steel Corporation 1901-1956, University of Toronto Press, Toronto, 1988 ISBN 0802067360
- Algoma production facilities
- Algoma SIAG press release
