Algoma steel cuts jobs despite subsidies as beam-mill bet shapes workers’ futures
A heavily subsidized Canadian steelmaker is still shedding jobs and posting deep losses, raising questions about the long‑term viability of those public bets.
According to the Financial Post, the federal and Ontario governments have already provided hundreds of millions of dollars in loans and other support to Sault Ste. Marie, Ont.-based Algoma Steel Inc., Canada’s only non‑foreign‑owned steel mill.
In September alone, Algoma disclosed $400m in federal loan relief and $100m from the Ontario government, on top of a separate $200m federal loan and preferential electricity pricing to support its shift away from coal‑fired blast furnaces to an electric arc furnace.
Despite this, the company continues to lose money.
As per the Financial Post, Algoma has reported adjusted EBITDA losses every quarter so far this year.
RBC Dominion Securities analyst James McGarragle projected that the company is on track to end 2026 with about $263.6m in adjusted EBITDA losses.
According to the Financial Post, incoming chief executive and chief financial officer Rajat Marwah said he aims to get the company closer to break‑even EBITDA by the end of 2026, which still falls short of a clear return to profitability.
Those financial pressures have already translated into significant job cuts.
The Financial Post reported that, even after securing recent government support, Algoma proceeded with a long‑planned restructuring that eliminated 1,000 of its 2,800 employees.
On the shop floor, a targeted support system is now trying to manage the fallout.
According to CBC News, the United Steelworkers union and the Canadian Skills Training and Employment Coalition (CSTEC) have opened a POWER Action Centre – short for Protect Ontario Workers Employment Response Centre – at the Steelworkers union office on Dennis Street in Sault Ste. Marie.
CBC News reported that the province has funded the centre with $1m so far and that it is CSTEC’s first such site in Ontario.
Employees who will lose their jobs in March can visit the centre for “peer-to-peer” support, refreshers on their collective agreement, recall rights and severance pay, and tailored guidance on training and work choices that affect employment‑insurance eligibility, as per CBC News.
The outlet said that as of Tuesday morning, 207 of the roughly 1,000 Algoma employees facing layoffs had registered.
Future performance hinges on a higher‑value product shift and new capacity that may or may not materialize.
Marwah told an earnings call that Algoma produces plate and coil steel and, as the only plate producer in Canada, expects to make money on plate, according to the Financial Post.
Coil, by contrast, is under heavy pressure.
The same report quoted Marwah saying “the market in Canada is broken … because coil is being sold at 40 percent lower than the CRU,” a benchmark price, which he said “is not making money for anybody.”
Analysts see a proposed structural beam mill as the potential turning point.
According to the Financial Post, there are currently no beam mills in Canada, and the country imports about 500,000 to 600,000 tonnes of beams annually.
Stifel Nicolaus Canada analyst Ian Gillies said that “under the status quo, without a beam mill, this company has a path to EBITDA break-even,” but called that “not a complete solution.”
He argued that “with the addition of a beam mill and government support in the form of a grant, this business has a real path back to profitability,” and estimated the mill could generate about $265m in EBITDA.
That path is far from certain.
As per the Financial Post, Gillies estimated a new beam mill could cost around $600m based on comparable US projects, a heavy lift for a company already carrying about $1bn in non‑current liabilities and still losing money.
He said it would only make sense if governments provided a grant rather than another loan.
According to the Financial Post, neither Ottawa nor Queen’s Park has formally committed to supporting the project, and construction has not been sanctioned.
Algoma’s external environment adds more risk.
Outgoing chief executive Mike Garcia has repeatedly said that US tariffs on steel, which jumped to 50 percent in June and remain in place, are effectively closing off Algoma’s main market, where it previously derived 55 percent or more of its revenues, reported the Financial Post.
The same article noted that a key wildcard is whether US President Donald Trump maintains those 50 percent tariffs on foreign steel or eventually backs off if shortages or price spikes emerge.
Public markets are reflecting the uncertainty.
According to the Financial Post, Algoma’s shares closed at $5.65 on Wednesday, down about 60 percent since the start of 2025.
Gillies set a 12‑month target of $11.50 – more than double the current level – but cautioned in his note that “the path to realize this will be choppy.”
