KEY POINTS
- Algoma expects third-quarter steel shipments to fall 65% to 145,000 tonnes.
- The turbine outage is projected to reduce adjusted EBITDA by $10 million to $20 million.
- The company expects its second electric arc furnace to begin contributing to production in Q4.
Algoma Steel expects its third-quarter steel shipments to fall by 65% following an unexpected turbine outage at its Lake Superior Power facility in Canada, which disrupted production and affected its financial performance.
The Canadian steel producer forecasts total shipments of 145,000 tonnes for the three months ended September 30, 2026, compared with 419,000 tonnes recorded in the corresponding period of 2025.
The outage affected the company’s steelmaking operations as it continued its transition to electric arc furnace (EAF) technology. Algoma said the disruption would significantly reduce shipments and weigh on its adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA).
Algoma estimated that the unplanned outage would reduce its adjusted EBITDA by between $10 million and $20 million. However, the financial impact would have been greater without a capacity utilisation adjustment benefit of approximately $50 million.
The outage occurred at the company’s Lake Superior Power facility, which supplies electricity to its steelmaking operations. The disruption affected production at a critical stage of Algoma’s transformation, contributing to the sharp decline in expected quarterly shipments.
The company has since installed a replacement turbine, restoring the facility to full power and allowing operations to return to normal electricity supply levels.
Algoma CEO Rajat Marwah acknowledged the assistance of Ontario’s Independent Electricity System Operator and Hydro One in restoring reliable power and supporting operational continuity during the disruption.
Second electric arc furnace nears production
Despite the setback, Algoma is progressing towards the commissioning of its second electric arc furnace, with the company expecting the first heat in the coming days.
Marwah said all electrical equipment associated with Electric Arc Furnace Unit Two had been tested, paving the way for the furnace to begin operating and contribute to production and shipments in the fourth quarter of 2026.
The company expects the second furnace to strengthen its production capacity as it moves away from traditional steelmaking methods towards electric arc furnace technology.
Chief Financial Officer Michael Moraca said the unexpected outage also provided an opportunity to accelerate previously scheduled maintenance and commissioning activities at the second furnace.
According to Moraca, bringing forward some of these activities during the disruption is expected to reduce future planned downtime and support a more efficient production schedule once the facility is fully operational.
The company is therefore seeking to use the period of disruption to complete essential maintenance and prepare its production facilities for improved performance in subsequent quarters.
With electricity supply restored, scheduled maintenance completed and the second furnace approaching commercial operations, Algoma expects to enter the final phase of its transformation with improved operational prospects.
Marwah said improving steel prices, alongside the progress made in commissioning the second furnace, would support the company’s efforts to strengthen production and shipments.
The anticipated recovery in output during the fourth quarter will depend partly on the successful commissioning of EAF Unit Two and the company’s ability to ramp up production following the disruption.
