NEW YORK Canadian flat-rolled steel producer Essar Steel Algoma Inc. has been granted a 12-month deferral of special pension payments by the government of Ontario effective December 2012 to November 2013.
The company would have had to make payments of approximately Canadian $70 million ($71 million) over the period, a company spokeswoman told AMM
Essar will continue to pay ongoing pension service costs for its defined-benefit pension plans, the company said.
The deferral was necessary because of historically low interest rates that have more than doubled the companys pension contributions compared with previous years, as well as a decline in steel prices and one-time operational issues, the company said.
These issues include an unplanned outage of Essars blast furnace and problems implementing a new computer system, the spokeswoman said.
This temporary relief, in combination with continued cost-cutting, operational improvements, improving industry fundamentals and lower raw material costs, will enable Essar Steel Algoma to manage its liquidity through this difficult cycle, chief executive officer Kalyan Ghosh said.
Sault Ste. Marie, Ontario-based Essar, a subsidiary of Mumbai, India-based Essar Group, has recorded three consecutive losing quarters (amm.com
, Nov. 14).