Sault “soldiering on” with port plans despite Essar uncertainty

Sault Ste. Marie’s $147-million port plans are in limbo, pending the outcome of Essar Steel Algoma’s restructuring, but the city’s economic development department head vows they’re pressing on to make this high-priority infrastructure project a reality.

The city’s hands are tied on who will eventually take control of the troubled Sault steel producer, but Tom Dodds, CEO of the Sault Ste. Marie Economic Development Corporation, insisted they’ve made way too much progress to stop now.

“We are soldiering on. This is the best we’ve ever gotten in terms of forward momentum.”

Dodds regards the public-private venture they’ve established with Essar, through the Port of Algoma project, as providing the Sault with a sure-fire competitive advantage that will drive freight and new business into the city, now and into the future.

“From the city’s standpoint, we need a public access port.”

But until the steel mill’s ownership situation is sorted out, all parties involved – including potential shippers and government funders – are “hitting the pause button” until all the matters are resolved through the courts.

The Sault steel producer filed for creditor protection under Companies' Creditors Arrangement Act (CCAA) in November 2015.

During the insolvency proceedings in early October, an Ontario Superior Court judge questioned the legitimacy of the port authority and the complicated cargo-handling and payment arrangements between Essar Ports and Essar Steel Algoma, with Justice Frank Newbould calling the fledgling port authority “insolvent.”

The Port of Algoma was created as a business entity in September 2014 when Essar Steel spun off its dock facilities as part of a restructuring deal.

The port is 99 per cent owned by Essar Ports, a subsidiary of Essar Steel Algoma’s parent company, Essar Global Fund. The City of Sault Ste. Marie owns the remaining one per cent.

Whether Essar Ports stays in the picture or not as a development partner, Dodds said the city intends to stay the course.

“The players may change but the idea continues,” he said. “If this is a good idea and has merit, someone else will pick it up.

“We have to look beyond this current situation with CCAA. We simply can’t let that distract us.”

With control of the century-old steelworks up for grabs, new ownership could conceivably scuttle much of the project’s preparatory legwork and decide to keep outsiders off of its dock facilities on the St. Mary’s River.

“That would be our concern,” admitted Dodds. “What I’m hopeful for is that any new owner would recognize the value and the priority that the city places on having this infrastructure in place.”

For decades, city leaders had been unable to make any headway in capitalizing on the Sault’s location on a vital commercial waterway between Lakes Superior and Huron.

The only dock facilities that can accommodate Seaway-draft vessels are owned by Essar Steel Algoma as a private harbour.

In years past, the former Algoma Steel management would discourage outside, non-core business from using their facilities and stevedores.

After Essar Global acquired Algoma in 2007, Dodds said the Mumbai-based multinational demonstrated a genuine commitment to upgrade the port and make room for outside shippers.

The Port of Algoma plans to call for expansive upgrades to the steel mill’s steel, iron ore and coal docks.

The export dock, on the west side of Essar’s 440-acre industrial property, would have land set aside for tenants, laydown space, covered storage and shore-side cargo-handling equipment.

There would be extensive dredging of the docks and the channel leading into the harbour. A port master plan, detailed project report and traffic study was finished last spring. First Nations consultation was carried out and the environmental assessment process is well advanced, said Dodds.

Applications were being prepared with the port’s business case to file applications to the federal New Build Canada Fund.

But the next phase of planning is on hold because of the uncertainty of the CCAA process.

By way of marine freight traffic, Dodds said there are “commitments that are continuing and pending” from potential aggregate shippers to the north and east of the city, particularly in trap rock, opportunities in forest products, and for anyone intending to ship large volumes of raw, bulk materials that can be more cost-effectively moved to market by ship.

Dodds said Essar Port officials have opened their eyes to the possibilities of value-added manufacturing in the Sault where products could be semi-finished before being shipped out for final finishing or assembly elsewhere.

The Sault could also be a regional distribution point for imported cargo coming through the Seaway, he added, based on Essar Ports’ global connections with European ports like Antwerp.

“These are all discussions that are moot until such time as you have the infrastructure in place.”