Algoma, a steelmaker, is expediting its shift to electric steelmaking due to the impact of U.S. tariffs on steel. Canadian Prime Minister Mark Carney recently met with U.S. President Donald Trump to seek relief from the 50 percent U.S. tariff that has been challenging Canadian steel producers since June, compounded by low global steel prices resulting from oversupply, particularly from China.
In response to the challenging operating environment caused by the tariffs, Algoma announced securing $500 million in government loans to facilitate its transition to electric steelmaking. The company stated that the tariffs have rendered its blast furnace and coke oven operations unsustainable, leading to a decision to exit these operations and accelerate the move towards electric steelmaking.
The shift towards decarbonization is a common theme among Canadian steelmakers facing similar economic pressures. Steel production globally contributes to approximately seven to nine percent of global greenhouse gas emissions that drive climate change. In Canada, the steel industry produced about 13.1 megatonnes of CO2 in 2023, equivalent to the emissions of approximately three million gas-powered cars, representing two percent of the country’s emissions.
To address the environmental impact of steelmaking, companies like Algoma are adopting innovative approaches. Algoma’s strategy includes transitioning to “secondary” steelmaking, which involves recycling scrap steel or utilizing refined iron instead of iron ore. This process, facilitated by electric arc furnaces (EAFs), eliminates the need for fossil fuels and significantly reduces carbon emissions.
Similarly, ArcelorMittal Dofasco is exploring the replacement of coal and coke with hydrogen to lower carbon emissions in primary steelmaking. This approach, known as direct reduced iron (DRI), has shown promise in Europe for producing pure iron without fossil fuels. The use of hydrogen in steel production is a key focus for ArcelorMittal Dofasco’s plant in Hamilton, aiming to significantly reduce emissions and transition to a more sustainable production model.
The government’s support through incentives and financial assistance has been instrumental in promoting green steel projects. Initiatives like industrial carbon pricing and updated green procurement standards are driving the industry towards sustainability goals. The future of competitive steel lies in green practices, emphasizing the importance of policy frameworks that steer the industry towards long-term environmental objectives.
