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Steelmaker Algoma files for bankruptcy protection amid metals slump

A woman stands looking at the No. 7 blast furnace at Essar Steel Algoma in Sault Ste. Marie, Ontario. Credit/THE CANADIAN PRESS

TORONTO – Steel producer Essar Steel Algoma Inc. says it will seek bankruptcy protection as it deals with a continued slump in the price of steel.

The company has filed requests with Canadian and U.S. courts as it seeks to restructure its long-term debt, and has raised US$200 million from a group of investors led by Deutsche Bank to fund ongoing operations.

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Essar Steel Algoma is the second-biggest steel producer in Canada and the largest employer in Sault Ste. Marie, Ont., with close to 3,000 employees.

MORE: OECD warns trade slowdown points to world recession danger

The company is a subsidiary of India-based global conglomerate Essar Steel.

In 2013, Essar Steel Algoma won a battle against organized labour when the Ontario government approved a new rule that allowed it to lower its pension contributions, which the company said had become unsustainable.

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