ESSAR STEEL ALGOMA HEADLINESSteel Producers /
Essar Steel Algoma
Algoma Steel gets Green Light for Co-Gen Power Project
Oct. 17, 2006
Oct. 17, 2006 — Algoma Steel’s proposal for a new cogeneration power facility has been accepted by the Ontario Power Authority (OPA).
The proposal, which was submitted by Algoma’s wholly-owned Limited Partnership, Algoma Energy LP (AELP), was submitted in response to the OPA's Request for Proposals for Combined Heat and Power Generation.
Pursuant to the proposal, AELP will construct and operate a new 70-MW cogeneration power facility at Algoma Steel's plant site, supported by a 20-year power purchase agreement with the OPA. Fueled by blast furnace and coke oven gases, the new facility will be will generate electricity and process steam.
The facility — which has an estimated capital cost of $135 million — is expected to be operational by the end of 2008. Based on the pricing formula in the power purchase agreement, the estimated cost of constructing and operating the facility and anticipated electricity and steam generation, Algoma expects the new facility to contribute approximately $30 million of annual consolidated EBITDA when completed.
"This is an excellent opportunity to confer benefits to the Province, Algoma Steel and the local community,” said Denis Turcotte, Algoma's President and CEO. “In addition to the direct economic benefits, the project will enhance the Province's energy profile and the environment through the addition of new power capacity utilizing currently flared industrial by-product gases.”
Regarding project financing, Denis Turcotte added, “Algoma is prepared to finance the facility out of cash reserves, however, AELP has been established to own and operate the facility and to explore the potential for alternative financing.”
Based in Sault Ste. Marie, Ont., Algoma Steel is an integrated steel producer whose revenues are derived primarily from the manufacture and sale of rolled steel products including hot and cold rolled sheet and plate.