Image source: Algoma Steel
Algoma Steel (ASTL) announced Thursday that it has awarded GE Gas Power, a unit of General Electric (GE), a contract for an upgrade to its natural gas combined cycle power plant, including the installation of two gas turbine packages.
The company expects the upgrade to provide sufficient internal generation capability to power phase one of its transition to electric arc furnace (“EAF”) steelmaking.
Transitioning to Green Steelmaking
Algoma is a leading Canadian producer of hot and cold rolled steel sheet and plate products headquartered in Sault Ste. Marie, Ontario. The company announced in November 2021 that it would replace legacy blast furnace and basic oxygen steelmaking processes with state-of-the-art EAFs.
When fully transitioned with GE’s two LM6000 aero derivative gas turbines, the new operation is expected to reduce carbon emissions by approximately 70%.
Algoma CEO Michael McQuade said, “Our transformation to EAF steelmaking and green steel products includes the upgrade of our internal electricity generation capacity, and we are pleased to partner with industry leader General Electric to complete this important milestone.”
“The project also reflects Algoma’s continued commitment to our community by engaging local contractors to support the installation.”
Eric Gray, CEO of GE Gas Power for the Americas, said, “We are proud to support Algoma in their energy transition program to help them become a leader in the production of steel with more efficient gas technologies and bring more flexible and lower-carbon power for their industrial process.”
At full capacity, the refurbished facility will have capacity for generating 110 MW of electricity, more than triple its current capacity of 34 MW.
Algoma’s Return to the Public Equity Markets
Image source: BigCharts
Algoma has been in business for 120 years. The venerable steemaker was acquired in 2007 by Essar Group, the Indian conglomerate, for $1.6 billion. When steel prices collapsed in 2015, Essar began bankruptcy proceedings, from which Algoma emerged as an independent entity.
In May 2021, Algoma agreed to merge with Legato Merger Corp, a special purpose acquisition company which itself had only gone public a few months beforehand.
While Algoma missed the strong bull run of its peers in the first part of the year, the stock has come under pressure since the merger was completed in October 2021.
At just under $1 billion in market cap, Algoma is a value play on the industry’s transition to more sustainable production practices, and we think investors will support the company as it moves to a greener future.
Source: Equities News