Canada's last remaining independent steel producer, Algoma Steel Inc., is navigating a precarious financial future, heavily reliant on government intervention and a hoped-for surge in national infrastructure and defence projects to return to profitability.
Government Lifelines and a Critical Pivot
Based in Sault Ste. Marie, Ontario, Algoma has already received substantial financial backing from both the federal and provincial governments. This includes $400 million in federal loan relief and an additional $100 million from Ontario. However, this support has come with significant pain, including the layoff of 1,000 employees from its workforce of 2,800 as part of a strategic restructuring.
The path forward may hinge on a proposed new facility. Both Federal Industry Minister Mélanie Joly and Ontario Premier Doug Ford have indicated openness to supporting Algoma if it constructs a structural beam manufacturing plant. Analysts suggest this could be the key to transforming the company's fortunes.
The Core of the Financial Struggle
Algoma's financial woes are deep-seated. The company has reported losses on an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) basis in every quarter of 2025. RBC Dominion Securities analyst James McGarragle projects the company will finish 2026 with adjusted EBITDA losses of $263.6 million.
Incoming CEO Rajat Marwah, who also serves as CFO, stated in October that the immediate goal is to bring the company closer to breaking even by the end of 2026—a focus on losing less money rather than generating profits, a state some describe as a corporate "zombie."
The company's challenges are twofold. While it holds a monopoly as Canada's only plate steel producer—a segment where it expects to be profitable—its coil steel operations are under intense pressure. Algoma operates the smallest of three domestic coil mills in a market suffering from a glut of supply.
External Pressures and a Potential Path Forward
A major external shock has been punishing U.S. tariffs on steel, which escalated to 50% in June 2025 and remain in place. This has effectively closed off Algoma's primary export market, which historically accounted for over 55% of its revenue.
Analyst Ian Gillies of Stifel Nicolaus Canada Inc. summarized the situation starkly: "Under the status quo, without a beam mill, this company has a path to EBITDA break-even. But that’s not a complete solution." He argues that building a beam mill, coupled with a government grant, could provide "a real path back to profitability."
The company and its government backers are now betting that Canada's planned ramp-up in infrastructure and defence spending will create the sustained domestic demand needed to justify such an investment and secure the future of this iconic Canadian industrial player.
