The federal and Ontario governments are defending their decision to loan hundreds of millions of dollars to Algoma Steel, despite knowing the company’s business plan to lay off workers.
“What I know is that without federal support, Algoma would not be in the position that they are today,” Finance Minister Francois-Philippe Champagne said while speaking to reporters on Parliament Hill on Wednesday.
“What we needed to do was to make sure we support Algoma, first for the workers and secondly, for pivoting to a different technology.”
Champagne’s comments come after Algoma Steel CEO Michael Garcia told CTV’s Power Play on Tuesday that both levels of government knew the company’s business plan included a re-tooling of its Sault Ste. Marie plant that would result in layoffs before they agreed to half a billion dollars in loan assistance to help the company weather the storm of U.S. tariffs.
“It knows the pivot that we had to make. It knew very well the extreme pressure the company was under. I don’t think anybody would loan the company half a billion dollars without asking very detailed questions about what our business plan was,” Garcia told host Vassy Kapelos.
Garcia also said he had been “very open” with both the government and his employees about the direction of the company moving forward.
Algoma, which is Canada’s last remaining independent steel producer, issued layoff notices to about 1,000 workers on Monday, effective in March. The company employs 2,700 people in northern Ontario.
But the layoffs come less than a month after the company said it had completed $500 million in financing agreements with the federal government and Government of Ontario, which had provided loans of $400 million and $100 million, respectively in the face of U.S. President Donald Trump’s 50 per cent tariff on steel imports.
Since 2021, the steel producer has been transitioning to Electric Arc Furnace (EAF) steelmaking, which the company describes as more cost-effective, more flexible, and less labour-intensive. It also means a shutdown of its current blast furnace and coke oven operations.
Speaking to Kapelos, Garcia said the company’s transition was originally slated for early or late 2027, but the impact of Trump’s tariffs accelerated their timeline. He also made it clear the jobs being cut in March are “not coming back.”
Pressed by reporters on why the federal government would give money, despite knowing about the pending layoffs, Champagne insisted the situation at Algoma would “be far different today.”
“If it was not for the support, the situation at Algoma would be dire today. More challenging than what you see,” Champagne said, adding the funding helped to “assure the long-term sustainability of Algoma.”
‘We chose the future:’ Carney
Prime Minister Mark Carney and Conservative Leader Pierre Poilievre sparred over the loan to Algoma in Question Period on Wednesday, with Poilievre criticizing Carney for not guaranteeing jobs in exchange for the money.
“How is it the prime minister could have been so incompetent to saddle Canadians who can’t afford to pay their bills with a $400 million bailout bill without any guarantee of jobs staying in Canada,” Poilievre asked.
In response, Carney said “there would have been an even darker day” if not for the loan, which he claimed saved two-thirds of the jobs at the company.
Poilievre then accused Carney of giving Algoma workers “a bridge to the unemployment lines.”
“As long as the CEO is happy with the $400 million gift he got from the prime minister, that’s all that matters to these Liberals,” Poilievre said.
Carney answered by pointing to Ontario Premier Doug Ford.
“Mr. Speaker, may I quote a Conservative leader that’s actually in office, the Premier of Ontario,” Carney said. “We had a choice. Save two-thirds of the jobs, or let the company go down. We chose the future. We chose the future for Algoma Steel so they can invest in the future. So we can buy Canadian. So we can build this country.”
Ontario says loan helped ‘keep doors open’
Ontario’s Minister of Economic Development, Job Creation and Trade Vic Fedeli also defended the province’s $100-million loan to Algoma in September.
When asked about the loan by reporters at Queen’s Park on Wednesday, Fedeli said the company “talked about these electric arc furnace layoffs for a long time now.”
“Everybody, including the unions, knew (the layoffs) were coming, but they’re coming faster because of the Trump tariffs,” Fedeli said, later adding he sees a “great future” for the company.
While Fedeli did not say when Algoma informed the government about the upcoming layoffs, he insisted the provincial money helped the company “keep their doors open.”
With files from CTV News’ Samantha Pope and Mike Le Couteur
