Algoma Steel is under renewed scrutiny after confirming it will lay off 1,000 workers at its Sault Ste. Marie plant—barely two months after receiving major government financial support meant to safeguard jobs.
In September, Ottawa announced $400 million in loans to Algoma Steel, praising the move as essential to “protect Canadian steel jobs” and keep the northern Ontario steelmaker competitive. Ontario added another $100 million, bringing total public funding to $500 million.
But on Tuesday, Algoma said it would issue 1,000 layoff notices, raising sharp questions about why taxpayer money was awarded while the company was preparing significant workforce reductions. Some analysts argue the funding is less about immediate job security and more about sustaining a critical domestic industry through a turbulent period. Colin Mang, an economics professor at McMaster University who studies the steel sector, said U.S. President Donald Trump’s 50 per cent tariffs on Canadian steel created “a one-time massive disruption,” leaving the company struggling with cash flow while still facing large operating costs.
Mang said the government support was intended to help Algoma transition, remain solvent, and eventually return to positive cash flow once its production processes adjust. However, union leaders say the support should have come with strict job-protection conditions. Bill Slater, president of United Steelworkers Local 2724, said governments continue to hand out substantial financial packages without requiring companies to maintain employment levels in return.
The $500 million in loan guarantees is not the first time Algoma has received public backing. In 2021, the federal government committed up to $420 million to help the company shift from coal-fire operations to cleaner electric-arc furnace technology—part of a major modernization effort to reduce emissions and secure the long-term viability of Canadian steelmaking. Still, the newest round of layoffs has sparked frustration and renewed debate about how government funds should be tied to job protection, accountability, and long-term industrial strategy.
