Benzinga | Jul 15, 2021 01:48PM EDT

Algoma Steel's Eco-Friendly Transformation gets Massive $420M CAD Commitment from Canadian Government

The quest for better and more advanced eco-friendly industrial tools and machines just got a big boost from fully integrated steel producer Algoma Steel Inc. Algoma has proposed to transform its capabilities and shift to electric arc furnace (EAF) steelmaking , which is a much more environmentally friendly way to produce steel.

The transformation toward EAF technology has "the potential to reduce Algoma Steel's carbon emissions by approximately 70%, making the project among the lowest-cost-per-tonne of GHG (greenhouse gas) reduction in Canada," according to Algoma's recent press release on the subject. "When combined with Ontario's low-carbon power, Algoma Steel will be positioned as the 'greenest' producer of flat-rolled steel in Canada and among the greenest in North America."

The significant effect this could have on Algoma's (and the future steel industry) emissions meant a great deal to the Canadian government. Canadian Prime Minister Justin Trudeau and Minister of Innovation, Science and Industry Fran?ois Phillippe Champagne, were present at Algoma's facilities for the announcement.

The total package of the commitment includes up to CA$200 million from Canada's Innovation Science and Economic Development. Specifically, the Strategic Innovation Fund (SIF) through the Net Zero Accelerator to rapidly expedite decarbonization projects and accelerate Canada's green-focused industrial transformation.

The remaining CA$220 million is being provided by the Canada Infrastructure Bank as part of an investment agreement. These significant financial opportunities for Algoma also almost certainly mean something big for its recently merged parent company Legato Merger Corp. (NASDAQ:LEGO).

Eco-Steel Could be the Norm of the Future

Algoma CEO Michael McQuade stated, "Having a commitment of this magnitude from the government of Canada shows leadership toward a net-zero, climate-resilient Canada and is so very important as we look to make our proposed transformation to EAF steelmaking a reality. We were honored to host Prime Minister Trudeau and Minister Champagne today."

While many steelmaking operations might not use any kind of advanced EAF technology yet, Canada's government has shown commitment to the industry. Steelmaking may be ripe for possible innovation and disruption toward even higher productivity and better environmental impact.

With this significant step for one Canadian steelmaker taken, it might not be long before numerous others move in a similar direction and seek out the best ways to reduce emissions and optimize industry for the environment.