Algoma Steel Group, a leading Canadian producer of hot-rolled and cold-rolled steel, has announced the completion of a C$500 million financial agreement with the federal and provincial governments of Ontario.

The financing includes $400 million from the Canadian Emergency Business Financing Corporation (CEEFC) and an additional $100 million from the Province of Ontario. Both positions include secured tranches of $80 million and $20 million, respectively. As part of the agreement, Algoma will issue 6.77 million warrants at a price of $11.08 per unit to purchase common shares for CEEFC and Ontario.

The 7-year credit lines will strengthen Algoma’s financial flexibility as the company moves forward with its transition to electric arc furnace steel production.

Rajat Marwah, President and Chief Financial Officer of Algoma, noted that, in line with previously announced terms, the new financing allows the company to focus on operational efficiency, cash generation, and a product-focused commercial strategy.

The rolled steel producer expects to initially receive funds from the secured tranche, which will provide immediate liquidity to support operations and achieve short-term transformation milestones.

It should be recalled that Canada has proposed removing tariffs on certain steel and aluminum products imported from the US and China. In this way, the government seeks to help local businesses that have been affected by trade wars.