The federal and Ontario governments have pumped hundreds of millions of dollars of financial loans and other support into Sault Ste. Marie, Ont.-based Algoma Steel Inc. , Canada’s only non-foreign-owned steel mill, and that may just be the start of things. Earlier this month, Industry Minister Mélanie Joly suggested the federal government may be willing to support Algoma if it built a structural beam plant. Similar comments have been made by Ontario Premier Doug Ford . No one knows how long a structural beam steel mill would take to build or how much it would cost, nor whether or how much financial support the government would even offer, but one thing is clear: it may be the only thing that moves Algoma into the zone of profitability. “Under the status quo, without a beam mill, this company has a path to EBITDA break-even ,” said Ian Gillies, an analyst at Stifel Nicolaus Canada Inc., using a financial term for the company’s earnings before interest, taxes, depreciation and amortization. “But that’s not a complete solution.” Indeed, the company has lost money on an adjusted EBITDA basis in every quarter so far this year. James McGarragle, an analyst at RBC Dominion Securities Inc., said in a note that the company is on track to finish 2026 with a projected $263.6 million in adjusted EBITDA losses. Chief financial officer and incoming chief executive Rajat Marwah in October said he wants to bring the company closer to breaking even by the end of 2026. Put another way, the company is focused on losing less money, not profits, which is a position sometimes described as a zombie state: able to service debt, but not grow. But Gillies said building a beam mill could transform the situation. “With the addition of a beam mill and government support in the form of a grant, this business has a real path back to profitability,” he said. That would be welcome news for a company that was devastated during 2025. Outgoing chief executive Mike Garcia has repeatedly said United States tariffs on steel , which rose to 50 per cent in June and remain in effect, are effectively closing off its main market, where it derived 55 per cent or more of its revenues. In September, the company said it had received $400 million in federal loan relief, plus $100 million from the Ontario government. But even after receiving the money, it still had to cut 1,000 of its 2,800 employees as part of a long-considered strategy shift. Marwah said during an earnings call in October that the company produces two categories of steel goods: plate and coil. As the only plate producer in Canada, he predicted Algoma would make money. But it’s a different story on coil, where Algoma has the smallest of three domestic mills and there’s a glut of supply. “The market in Canada is broken … because coil is being sold at 40 per cent lower than the CRU,” he said, referring to a widely used benchmark price, “(so that) is not making money for anybody.” Gillies said that’s why a structural beam mill could be so important. There aren’t any steel beam mills in Canada and the country imports somewhere in the range of 500,000 tonnes to 600,000 tonnes of beams per year. Instead of producing for the highly competitive coil market, where margins are currently stifled, Algoma could produce the country’s only domestic beams and potentially reap profits. “In absolute terms, we believe the beam mill could generate EBITDA of $265 million,” Gillies said in a note earlier this month. But it would likely take years to complete construction, which hasn’t even been sanctioned yet, and rather remains more of a speculative idea. Asked for comments on its future, Algoma did not answer prior to the publishing date. There’s another catch. Using data from comparable facilities recently constructed in the U.S., Gillies estimated it would likely cost Algoma around $600 million to build a facility to manufacture beams. For a company with $1 billion in non-current liabilities on its balance sheet that is struggling to break even, building a whole new mill could be a heavy lift, which is why Gillies said it would only work if government support came in the form of a grant rather than a loan. So far, neither Ontario nor the federal government has formally committed any support to the project. More to the point, Algoma has yet to reach a break-even EBITDA point, and its plan to do so involves shutting down its coal-fired blast furnace and coking ovens so that it can pivot to an electric arc furnace, which can be fired up or shut down more easily to match steel production to demand. Algoma is also betting that Canada’s campaign to ramp up infrastructure and defence spending will increase demand for its steel plate, but that’s also uncertain. Garcia has estimated that Algoma already controls 50 per cent of the domestic plate market, which he estimated amounts to around 600,000 tonnes in demand annually. His hope is that it grows to one million tonnes. For the electric arc furnace, the company said as far back as 2021 that it was receiving federal support and later said it ultimately took a $200-million federal loan plus preferential pricing on electricity from Ontario to ease its transition away from coal. It all adds up to a lot of government support for a company that has been shedding jobs. There are other wildcards, too, including whether U.S. President Donald Trump will keep his 50 per cent tariffs on foreign steel in place or whether product shortages or a price spike may force him to eventually back down. Algoma’s stock closed Tuesday at $5.65, down about 60 per cent since the start of 2025. Gillies has a 12-month target of $11.50, more than double where it currently sits. “The path to realize this will be choppy,” he said in the note. Terence Corcoran: Forget Algoma. Here’s the real economic storyAlgoma Steel CEO stepping down amid deep losses, ongoing U.S. tariffs • Email: gfriedman@postmedia.com