$120 million sheet metal plant project seven months behind schedule

Algoma Steel is Canada’s only producer of low-profile steel plates used to manufacture Royal Canadian Navy warships, as well as bridges, buildings and wind turbines.

An investment of $120 million in our community is very important.

However, little has been disclosed about Algoma Steel’s $120 million sheet metal plant upgrade.

Largely overshadowed by Algoma’s even larger $700 million transition to electric arc steelmaking, most media references to what’s happening at the plate mill have been lip service. the air.

The electric arc furnace initiative is the costliest construction project in Sault Ste. The story of Mary. The project is on schedule and on budget, investors assured earlier this month.

Rebuilding the plate mill, however, is quite another thing.

Plagued by technical issues, this upgrade is seven months behind schedule and will not be completed until June 2023.

The delay is one of the causes cited for an 11.9% drop in newly announced shipments in the first quarter: 537,524 tons compared to 610,057 during the same period last year.

The average realized price of steel was up 37.8% from a year ago, so the drop in shipments received little attention given the strength of the results.

But Rajat Marwah, Algoma’s chief financial officer, warns that upcoming deliveries for the fiscal second quarter will also be affected.

“Our plate mill is taking longer, so we’ll see less volume being produced and shipped this quarter on the plate side,” Marwah said, during an investor presentation this month.

“So we were talking about a month-long outage, which probably took us another six to eight weeks to ramp up, or take six to eight weeks to ramp up. So we’ll see that impact come in the September quarter. The volume will be lower just because of the plate mill.”

Algoma Steel’s plate mill is Canada’s only producer of low-profile steel plate – a product used to manufacture Royal Canadian Navy warships (HMCS Toronto and HMCS Halifax) as well as bridges (Champlain Bridge, Bluewater Bridge), buildings (Pearson International Airport, Rogers Centre, GFL Memorial Gardens) and wind turbines across the province.

The company’s $120 million investment will result in wider plates, higher flatness and surface quality, and better thickness capability.

Upgrading the plate mill is done in two phases.

Here’s how Marwah described these phases in early March at the BMO Capital Markets Global Metals and Mining Conference in Hollywood, Florida:

Phase I – Quality Priority

Expected completion in October 2021 for installation and go-live of the following upgrades:

  • new primary descaler (improves surface quality)
  • automated surface inspection system (detects and maps quality)
  • new hot leveler (improves flatness)
  • factory automation upgrade 166 (expands grade offering)

Phase II – Focus on Productivity

Expected completion in October 2022 for installation and go-live of the following upgrades:

  • upgraded on-board descaling system for 2Hi and 4Hi
  • milling machine alignment and work roll offset at 4Hi
  • CC 4Hi Drive Upgrade
  • in-line plate cutting, including new cooling beds coupling plate mill and shear line, dividing shear and new plate stacker

The plate mill upgrade was subcontracted to Danieli Group, based in Buttrio, Italy, which designed and delivered Algoma’s flagship Direct Strip product complex in the mid-1990s.

Danieli is also the sole technology provider for Algoma’s transition to electric arc steel production.

As recently as May 26 of this year, Algoma Steel tweeted that its plate mill project was on track:

“We completed the first phase of our two-phase plate mill modernization project in June 2022, with expected quality achieved,” Algoma President and CEO Michael Garcia told investors this month. -this.

“The second phase, originally scheduled to be completed in November, has been extended to June 2023 to support our customers impacted by a longer than expected start-up, due to automation issues during the first phase.”

“Furthermore, by extending the schedule, we are better positioned to apply the learning from the first phase to the second shutdown phase to ensure seamless execution,” Garcia said.

Marwah pointed out that the Algoma plate mill is actually a combination mill. “It produces strip as well as sheet. And when the plant is down, it affects both sheet and sheet. So we saw that impact in the first quarter because the numbers are and we will see that a little impact will come in the September Quarter as well, as plate and tape take longer to ramp up.”


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