Algoma Steel Group will cut about 1,000 jobs, roughly 40 per cent of its workforce, and close its blast furnace and coke ovens in Sault Ste. Marie early next year as it accelerates a switch to electric arc furnace steelmaking.
The moves follow a steep drop in U.S. sales after new American tariffs raised the cost of Canadian steel at the border. Shares in Toronto fell sharply on the news. The transition brings forward an existing plan tied to Algoma’s C$700 million plus electric arc furnace project. The company said it will work with governments and unions on support programs for affected employees.
Tariffs hit cross-border sales
Layoff notices began going out on Dec. 1, with the bulk taking effect on March 23, 2026, according to union and local reports that put the total near 1,050 roles. The company confirmed it issued “approximately 1,000” notices tied to shuttering primary operations and pegged the effective date at March 23, 2026 as it moves off blast furnace production.
U.S. tariffs on steel have sharply constrained access to Algoma’s largest export market. Electric arc furnaces, which melt scrap steel using electricity, emit less carbon than blast furnaces that turn iron ore into steel. The shift will narrow Algoma’s product mix toward plate and select coil aimed at Canadian buyers.
Algoma framed the decision as a forced acceleration of its strategy. “Any strong and sustainable business begins with fair, free, and competitive access to the markets and customers it serves,” chief executive Michael Garcia said in a statement outlining the pivot and citing a 50 percent U.S. steel tariff as the breaking point.
The move marks the end of more than a century of integrated steelmaking at the Sault. In the near term, supply chains tied to the blast furnace and coke ovens will wind down. Management has said the electric arc line is designed to better match finishing capacity and be more flexible through the cycle.
The job losses will weigh on the local economy. Union leaders said they expect about 900 production roles and 150 salaried roles to be affected across operations.
“It is a lot of people for a community our size,” United Steelworkers Local 2724 president Bill Slater said, noting the city’s population is about 72,000.
Local agencies are preparing retraining and placement supports. Municipal officials have asked Ottawa and Queen’s Park to ensure programs roll out quickly and cover the specific skills needed in Northern Ontario.
Cash support and next steps
Ottawa and Ontario have already stepped in with fresh liquidity to keep the transition on track. Algoma closed a C$500 million package on Nov. 17, including C$400 million from the Canada Enterprise Emergency Funding Corporation and C$100 million from Ontario, both structured as seven‑year loan facilities.
As part of the deal, Algoma issued 6.77 million common share purchase warrants to the two governments, exercisable at $11.08 for 10 years, vesting as unsecured tranches are drawn. The financing bolsters working capital and helps bridge to first steel from the new arc furnaces.
Management says the plan is to complete the switch in early 2026, one year ahead of the prior schedule. Electric arc furnaces are expected to lower costs, cut emissions and reduce reliance on imported inputs like metallurgical coal.
The company has also amended and upsized its asset‑based lending facility to add resilience while the North American market remains unsettled. If the tariff environment eases, cross‑border flows could normalize, but the new footprint points Algoma more squarely at domestic customers in construction, energy and defence.
For workers and suppliers, the priority now is a smooth transition into roles that align with the redesigned mill and with other regional employers.
