Sault Star recently reported that the positioning of Essar Steel Algoma Inc in the global vision of Essar Steel Holdings Ltd is being hampered by the current global economic crisis.

Essar Global, the India based conglomerate which acquired then Algoma Steel Inc in a USD 1.85 billion cash transaction 18 months ago has invested substantially in its Sault Marie operation but output has not matched targets set. As per report, Essar’s immediate goal was a near doubling of production, from 2.4 million tonne to 4 million tonne by the end of 2009 and a further 1 million tonne shortly thereafter. However, demand has dried up.

Mr Jatinder Mehra CEO of Essar Steel Holdings said that “Algoma has not totally met our expectations. It has not been because of the people, or the management team, but an economic climate where people are simply no longer buying steel.”

Mr Mehra said that “We made a substantial investment in starting up another blast furnace only to shut it down 6 weeks after going operational.”

He said that the Sault plant has been operating at only 40% capacity since October, with expectations, the current downturn will be long and deep and a doubtful return to pre crisis production levels this year. The rolling out of massive global economic stimulus packages to kick start the economy won’t be of any immediate assistance.

He said that “It will be eight to nine months from the time the stimulus packages are announced until there is any actual spending. Stimulus is a good step and we are hopeful, but it will not improve things overnight.”

Mr Mehra said that “We remain committed to making Algoma the hub of our North American operations.”

(Sourced from www.saultstar.com)