Essar Steel Algoma files for protection from creditors

Essar Steel Algoma in Sault Ste. Marie, Ontario, will be entering bankruptcy restructuring according to the company, a fellow subsidiary of the company that owns Essar Steel Minnesota in Nashwauk. (PHOTO: Billy Wilson, Flickr CC)

Essar Steel Algoma in Sault Ste. Marie, Ontario, will be entering bankruptcy restructuring according to the company, a fellow subsidiary of the company that owns Essar Steel Minnesota in Nashwauk. (PHOTO: Billy Wilson, Flickr CC)

Essar Steel Algoma — sister company to Essar Steel Minnesota in Nashwauk — announced it would file for bankruptcy creditor protection in Canada and the United States today. The steel mill is located in Sault Ste. Marie, Ontario, and is part of Essar’s plans to use pellets made at the taconite plant under construction now on the Mesabi Iron Range. Both companies are subsidiaries of Essar Global in India.

UPDATE: An Essar Algoma official contacted me to clarify that the official statement said they filed for “creditor protection with the Ontario Superior Court of Justice under the Companies Creditor’s Arrangement Act, or as commonly referred to in Canada, CCAA. CCAA is a federal statute that enables companies to restructure their financial affairs under the supervision of the Court.”

It’s a slightly different process than traditional bankruptcy, but requires a joint Chapter 15 filing in the United States.

The CBC reports the story:

Essar Steel Algoma is the second biggest steel producer in Canada and the largest employer in Sault Ste. Marie, Ont., with close to 3,000 employees. …

“This process will provide the company with the time and stability to restructure our finances. We expect that Essar Steel Algoma will emerge stronger and better able to compete as an advanced manufacturer,” CEO Kalyan Ghosh said in a news release.

It’s troubling news for Sault Ste. Marie, but folks in Nashwauk are plenty nervous, too. Most contractors have left the construction site again. The work that had picked up months ago has ground to a halt. Again. It’s evident that cash flow during this iron and steel crunch is a continuing problem for Essar, lending credence to claims by rival Cliffs.

Nevertheless, more than half a $1.6 billion plant is standing guard over the former Butler Taconite site on the  western Mesabi. If finished, it would be the most efficient, lowest cost plant on the Iron Range.

This market environment remains very bad for all Iron Range ore producers, present or future.

Comments

  1. “Most contractors have left the construction site again.”

    well, I’m sure the politicians will simply go over to India and get some money for their next run at office…the plant won’t be built and the taxpayers will be on the hook. Thanks again all you politicians, love the symbiotic relationship between politicians handing out taxpayers money, some money being funneled by to politicians, and nothing getting accomplished for the people. perfect.

  2. All of this can be traced back to state laws, policies and institutions that jot only subsidize and support, but also obligate the public to develop and sell of tesources. The Taconic process was developed by state funding and today everything from the DNR, the labs, the mineral core sample library, the IRRRB and the agencies non-enrorcement of pollution regulations or wetland replacement is a giant subsidy and hand jolting operation creating this giant mess. Mining in Minnesota is not capitalism, it is a social welfare state for the extraction industry and those benifitting from it. These companies, the agencies and even the workers wouldn’t know real capitalism if it bit them in the butt.

  3. Brent Elledge says

    It very hard for honest companies to compete against government subsidized business.
    This would be expected in China or other communist countries.
    Where are we going with this?

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