Algoma Steel Group will receive C$500 million in government loans to bolster liquidity and accelerate its shift to electric arc furnace steelmaking, a move officials framed as support for Canadian jobs amid punishing U.S. tariffs.
Ottawa is providing C$400 million through the Large Enterprise Tariff Loan facility, while Ontario will add C$100 million on matching terms.
The financing is based on binding term sheets agreed with the company, according to the federal Department of Finance and the Canada Enterprise Emergency Funding Corporation, which administers the program.
In a company release, Algoma said the package comprises a 7 year facility structured in two parts and is designed to give the producer flexibility as it retools its mill and navigates trade uncertainty.
The federal portion sits within the LETL program, a C$10 billion pool created this year to help large firms cope with tariffs and countermeasures. The Ontario top up brings the total to C$500 million.
The loans include a C$100 million secured tranche that ranks behind existing first and second lien debt, and a C$400 million unsecured tranche paired with 6.77 million warrants exercisable at C$11.08 over 10 years.
Interest starts at CORRA plus 200 basis points for three years and steps up annually thereafter. Access to the facilities remains subject to definitive documentation and other customary conditions.
Michael Garcia, CEO of Algoma Steel, said in a press release, “We require this liquidity support to withstand this unprecedented U.S. governmental action.”
The company added that continued Section 232 tariffs have effectively closed the U.S. market to Canadian steelmakers, forcing it to emphasize product lines with reliable domestic demand.
Algoma’s pivot is one of Canada’s largest industrial decarbonization efforts and has been central to the company’s investment case since it went public.
Electric arc furnaces melt scrap rather than rely on coke fired blast furnaces, which cuts emissions sharply.
Algoma says its EAF route can lower annual carbon output by up to 70% once fully ramped, a change that could also improve cost predictability through scrap cycles.
The financing also marks the first loan issued under the federal LETL program, underscoring Ottawa’s readiness to deploy balance sheet support to strategic manufacturers when trade policy disrupts normal markets.
Program changes announced in recent weeks extended maturities to 7 years, lowered initial rates, and added flexibility such as potential equity participation, features that can reduce near term cash strain for borrowers.
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Algoma said the tariff environment has made continued operation of its blast furnace and coke ovens unsustainable and that it will accelerate the exit from those units while focusing on as-rolled and heat treated plate, along with select coil products, primarily for Canadian customers.
The company now pegs the total cost to complete the EAF project at about C$987 million. Shares trade on the Toronto Stock Exchange and Nasdaq under the ASTL symbol.
The Department of Finance called the impact of U.S. tariffs on the sector profound and said the support is meant to help Algoma continue operations, shift its business model away from heavy U.S. dependence, and limit disruption to its workforce.
