UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of February 2024

Commission File Number 001-40924

ALGOMA STEEL GROUP INC.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

105 West Street

Sault Ste. Marie, Ontario

P6A 7B4, Canada

(705) 945-2351

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F ☐   Form 40-F ☒

INCORPORATION BY REFERENCE

Exhibits 99.2 and 99.3 of this Form 6-K are incorporated by reference into the Registration Statement on Form S-8 (Commission File No.  333-264063) and the Registration Statement on Form F-10 (Commission File No. 333-272816) of the Registrant, Algoma Steel Group Inc.

2

EXHIBIT INDEX

3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

4

Exhibit 99.1

MEDIA RELEASE

February 6, 2024

Algoma Steel Group Reports Fiscal Third Quarter 2024 Financial

Results

Steel Shipments and Adjusted EBITDA In-line with Previously Announced Expectations

Delivered Year-over-year Improvement Across Nearly All Metrics

Provides Further Update on Coke-Making Utilities Structure Collapse

Reiterated Outlook on Transformative EAF Project with $509.9 Million Invested to Date and

86% of Anticipated Costs Under Contract

SAULT STE. MARIE, ONTARIO (February 6, 2024) – Algoma Steel Group Inc. (NASDAQ: ASTL; TSX: ASTL) (“Algoma” or “the Company”), a leading Canadian producer of hot and cold rolled steel sheet and plate products, today announced results for its fiscal third quarter ended December 31, 2023.

Unless otherwise specified, all amounts are in Canadian dollars.

Business Highlights and Fiscal 2024 to Fiscal 2023 Third Quarter Comparisons

In addition, subsequent to the quarter end, the Company restored partial coke-making capabilities and completed necessary repairs at the blast furnace, following operational challenges related to the unexpected collapse of a structure supporting utilities piping at the coke-making plant on January 20, 2024.

Michael Garcia, the Company’s Chief Executive Officer, commented, “We delivered results in the fiscal third quarter that were consistent with our previously disclosed outlook, accomplished against a challenging backdrop that included the remaining impact of the UAW strike and a heavy seasonal maintenance quarter. Improved market fundamentals coupled with the settlement of the strike in October led to a rebound in pricing which based on the lagging nature of our order book is expected to positively impact pricing realizations beginning in our fiscal fourth quarter.”

Algoma Steel Inc. | 105 West Street, Sault Ste. Marie, ON, Canada P6A 7B4 | T: 705-945-2351 F: 705-945-2203 | algoma.com

YOUR PARTNER IN STEEL. SINCE 1901

2

Mr. Garcia added, “As an update to our January 20th and January 23rd announcements regarding the collapse of a structure supporting utilities piping at our coke-making plant corridor, limited coke making operations continue and, as we develop our revised production plan, we will continue to evaluate our requirement for purchased coke to supplement our current inventories. We’ve finished all of the necessary repairs at the blast furnace following the related operational outage and have begun gradually restarting the furnace, increasing energy input as conditions permit. Based on our current assessment, we anticipate producing usable hot metal within the next seven days. We aim to return to full production within the next two weeks. The outage at the blast furnace and limited coke production are collectively expected to negatively impact shipments, costs and profitability in the fourth fiscal quarter.”

“Our transformative EAF project continues to advance in line with our expectations with commissioning expected to start by late 2024. As of December 31, 2023, we had invested a total of $509.9 million in its development, which represents approximately 60% of the anticipated total project cost. Importantly, project commitments to date total approximately $750 million with approximately 7% tied to time and material contracts, while the balance is fixed price in nature. We expect to contract the majority of the remaining costs by the end of the current quarter. We look forward to what promises to be an important and exciting year in the story of Algoma.”

Third Quarter Fiscal 2024 Financial Results

Third quarter revenue totaled $615.4 million, compared to $567.8 million in the prior year quarter. As compared with the prior year quarter, steel revenue was $556.9 million, compared to $512.0 million, and revenue per ton of steel sold was $1,192, compared to $1,239. Loss from operations was $36.9 million, compared to a loss of $65.7 million in the prior-year quarter.

The year over year improvement was primarily due to increased steel shipment volumes as a result of improved market conditions and resolving the temporary downstream finishing constraints for plate that occurred during the three-month period ended December 31, 2022. Further, higher cost of steel revenue as a result of increased shipment volumes was partially offset by a decrease in pricing for natural gas, purchased coke, alloys and power.

Net loss in the third quarter was $84.8 million, compared to a loss of $69.8 million in the prior-year quarter. The increase was primarily due to the change in fair value of warrant liabilities, share-based compensation liabilities, and earnout liabilities, a decrease in income tax recovery, an increase in foreign exchange losses, and an increase in financing charges, which more than offset the improvements in loss from operations.

Adjusted EBITDA in the third quarter was $(1.0) million, compared with $(35.9) million for the prior-year quarter. This resulted in an Adjusted EBITDA margin of (0.2)%. Average realized price of steel net of freight and non-steel revenue was $1,079 per ton, compared to $1,116 per ton in the prior-year quarter. Cost per ton of steel products sold was $1,027, compared to $1,157 in the prior-year quarter. Shipments for the third quarter increased by 12.6% to 516,068 tons, compared to 458,341 tons in the prior-year quarter due primarily to the reasons mentioned above. See “Non-IFRS Measures” below for an explanation of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.

Algoma Steel Inc. | 105 West Street, Sault Ste. Marie, ON, Canada P6A 7B4 | T: 705-945-2351 F: 705-945-2203 | algoma.com

YOUR PARTNER IN STEEL. SINCE 1901

3

Coke-making Plant Utilities Structure Update

As previously disclosed, on January 20, 2024, there was a collapse of a structure supporting utilities piping at the Company’s coke-making plant. No injuries occurred during the event. Additionally, for safety reasons, blast furnace operations were suspended at the time of the incident. The blast furnace experienced operational challenges upon initial restart due to unforeseen impacts related to the piping collapse.

Limited production of coke resumed at three coke-production units on January 23, which, when combined with inventories on hand and the availability of third-party coke supplies, is currently expected to fulfill the Company’s requirements for normal steelmaking production while the repair plan is developed. All necessary repairs to the blast furnace have been completed, and the furnace is now undergoing a gradual restart process. Additional energy will be added to the furnace as conditions permit. Based on current information, usable hot metal is expected to be produced within the next seven days, with a return to full production anticipated within the next two weeks. Algoma has standard insurance coverage that is intended to address circumstances such as these, including business interruption insurance. The Company is in the process of submitting claims under its insurance policies for covered losses.

Mr. Garcia commented, “Thanks to the fast response and hard work of our entire team, we were able to quickly resume limited coke-making capacity, and as of today we have restarted the blast furnace and continue ramping to normal production levels. The outage at the blast furnace and limited coke production are, however, collectively expected to negatively impact shipments, costs and profitability in the fiscal fourth quarter.”

Electric Arc Furnace

The Company has made substantial progress on the construction of two new state-of-the-art electric arc furnaces (“EAF”) to replace its existing blast furnace and basic oxygen steelmaking operations. The anticipated project timing and budget remain consistent with the outlook provided in the fiscal fourth quarter 2023 earnings release. As of December 31, 2023, the cumulative investment was approximately $509.9 million of the total projected cost of $825 million to $875 million. Project commitments to date total approximately $750 million with approximately 7% tied to time and material contracts, while the balance is fixed price in nature. We believe that we remain on track for commissioning late in calendar 2024. Following the transformation to EAF steelmaking, Algoma’s facility is expected to reach an annual raw steel production capacity of approximately 3.7 million tons, matching its downstream finishing capacity, and to generate an approximate 70% reduction in the Company’s annual carbon emissions.

Quarterly Dividend

The Board has declared a regular quarterly dividend in the amount of US$0.05 on each common share outstanding, payable on March 29, 2024, to holders of record of common shares of the Company as of the close of business on February 29, 2024. This dividend is designated as an “eligible dividend” for Canadian income tax purposes.

Algoma Steel Inc. | 105 West Street, Sault Ste. Marie, ON, Canada P6A 7B4 | T: 705-945-2351 F: 705-945-2203 | algoma.com

YOUR PARTNER IN STEEL. SINCE 1901

4

Conference Call and Webcast Details

A webcast and conference call will be held on Wednesday, February 7, 2024 at 11:00 a.m. EDT to review the Company’s fiscal third quarter results, discuss recent events, and conduct a question-and-answer session.

The live webcast and archived replay of the conference call can be accessed on the Investors section of the Company’s website at www.algoma.com. For those unable to access the webcast, the conference call will be accessible domestically or internationally by dialing 877-425-9470 or 201-389-0878, respectively. Upon dialing in, please request to join the Algoma Steel Third Quarter Conference Call. To access the replay of the call, dial 844-512-2921 (domestic) or 412-317-6671 (international) with passcode 13743566.

Consolidated Financial Statements and Management’s Discussion and Analysis

The Company’s unaudited condensed interim consolidated financial statements for the three and nine months ended December 31, 2023, and Management’s Discussion & Analysis thereon are available under the Company’s profile on the U.S. Securities and Exchange Commission’s (“SEC”) EDGAR website at www.sec.gov and under the Company’s profile on SEDAR+ at www.sedarplus.ca.

Cautionary Statement Regarding Forward-Looking Statements

This news release contains “forward-looking information” under applicable Canadian securities legislation and “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”), including statements regarding trends in the pricing of steel, price realizations and other key inputs in the steelmaking process, the restart of coke making operations, the anticipated timing to restart the blast furnace, produce usable hot metal and return to full production, Algoma’s expectation to continue to pay a quarterly dividend, Algoma’s transition to EAF steelmaking, including the progress, costs and timing of completion of the Company’s EAF project, Algoma’s future as a leading producer of green steel, Algoma’s modernization of its plate mill facilities and the status and timing thereof, transformation journey, ability to deliver greater and long-term value, ability to offer North America a secure steel supply and a sustainable future, and investment in its people, and processes, statements regarding the Company’s intended use of cash on hand, cash from operations and proceeds from the Company’s credit facilities, and the Company’s strategy, plans or future financial or operating performance. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “design,” “pipeline,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions. Many factors could cause actual future events to differ materially from the forward-looking statements in this document. Readers should also consider the other risks and uncertainties set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Information” in Algoma’s Annual Information Form, filed by Algoma with applicable Canadian securities regulatory authorities (available under the company’s SEDAR+ profile at www.sedarplus.ca) and with the SEC, as part of Algoma’s Annual Report on Form 40-F (available at www.sec.gov), as well as in Algoma’s current reports with the Canadian securities regulatory authorities and SEC. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Algoma assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

Algoma Steel Inc. | 105 West Street, Sault Ste. Marie, ON, Canada P6A 7B4 | T: 705-945-2351 F: 705-945-2203 | algoma.com

YOUR PARTNER IN STEEL. SINCE 1901

5

Non-IFRS Financial Measures

To supplement our financial statements, which are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”), we use certain non-IFRS measures to evaluate the performance of Algoma. These terms do not have any standardized meaning prescribed within IFRS and, therefore, may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing a further understanding of our financial performance from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.

Adjusted EBITDA, as we define it, refers to net income (loss) before amortization of property, plant, equipment and amortization of intangible assets, finance costs, interest on pension and other post-employment benefit obligations, income taxes, foreign exchange loss (gain), finance income, carbon tax, changes in fair value of warrant, earnout and share-based compensation liabilities, transaction costs, earnout and share-based compensation liabilities, transaction costs, listing expense, past service costs – pension, past service costs – post-employment benefits and share-based compensation related to Omnibus Long Term Incentive Plan. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue for the corresponding period. Adjusted EBITDA is not intended to represent cash flow from operations, as defined by IFRS, and should not be considered as alternatives to net profit (loss) from operations, or any other measure of performance prescribed by IFRS. Adjusted EBITDA, as we define and use it, may not be comparable to Adjusted EBITDA as defined and used by other companies. We consider Adjusted EBITDA to be a meaningful measure to assess our operating performance in addition to IFRS measures. It is included because we believe it can be useful in measuring our operating performance and our ability to expand our business and provide management and investors with additional information for comparison of our operating results across different time periods and to the operating results of other companies. Adjusted EBITDA is also used by analysts and our lenders as a measure of our financial performance. In addition, we consider Adjusted EBITDA margin to be a useful measure of our operating performance and profitability across different time periods that enhance the comparability of our results. However, these measures have limitations as analytical tools and should not be considered in isolation from, or as alternatives to, net income, cash flow from operations or other data prepared in accordance with IFRS. Because of these limitations, such measures should not be considered as measures of discretionary cash available to invest in business growth or to reduce indebtedness. We compensate for these limitations by relying primarily on our IFRS results using such measures only as supplements to such results. See the financial tables below for a reconciliation of net income (loss) to Adjusted EBITDA.

Algoma Steel Inc. | 105 West Street, Sault Ste. Marie, ON, Canada P6A 7B4 | T: 705-945-2351 F: 705-945-2203 | algoma.com

YOUR PARTNER IN STEEL. SINCE 1901

6

About Algoma Steel Group Inc.

Based in Sault Ste. Marie, Ontario, Canada, Algoma is a fully integrated producer of hot and cold rolled steel products including sheet and plate. Driven by a purpose to build better lives and a greener future, Algoma is positioned to deliver responsive, customer-driven product solutions to applications in the automotive, construction, energy, defense, and manufacturing sectors. Algoma is a key supplier of steel products to customers in North America and is the only producer of discrete plate products in Canada. Its state-of-the-art Direct Strip Production Complex (“DSPC”) is one of the lowest-cost producers of hot rolled sheet steel (HRC) in North America.

Algoma is on a transformation journey, modernizing its plate mill and adopting electric arc technology that builds on the strong principles of recycling and environmental stewardship to significantly lower carbon emissions. Today Algoma is investing in its people and processes, working safely, as a team to become one of North America’s leading producers of green steel.

As a founding industry in their community, Algoma is drawing on the best of its rich steelmaking tradition to deliver greater value, offering North America the comfort of a secure steel supply and a sustainable future as your partner in steel.

Algoma Steel Inc. | 105 West Street, Sault Ste. Marie, ON, Canada P6A 7B4 | T: 705-945-2351 F: 705-945-2203 | algoma.com

YOUR PARTNER IN STEEL. SINCE 1901

7

Algoma Steel Group Inc.

Condensed Interim Consolidated Statements of Financial Position

(Unaudited)

Algoma Steel Inc. | 105 West Street, Sault Ste. Marie, ON, Canada P6A 7B4 | T: 705-945-2351 F: 705-945-2203 | algoma.com

YOUR PARTNER IN STEEL. SINCE 1901

8

Algoma Steel Group Inc.

Condensed Interim Consolidated Statements of Net (Loss) Income

(Unaudited)

Algoma Steel Inc. | 105 West Street, Sault Ste. Marie, ON, Canada P6A 7B4 | T: 705-945-2351 F: 705-945-2203 | algoma.com

YOUR PARTNER IN STEEL. SINCE 1901

9

Algoma Steel Group Inc.

Condensed Interim Consolidated Statements of Cash Flows

(Unaudited)

Algoma Steel Inc. | 105 West Street, Sault Ste. Marie, ON, Canada P6A 7B4 | T: 705-945-2351 F: 705-945-2203 | algoma.com

YOUR PARTNER IN STEEL. SINCE 1901

10

Algoma Steel Group Inc.

Reconciliation of Net (Loss) Income to Adjusted EBITDA

For more information, please contact:

Michael Moraca

Treasurer & Investor Relations Officer

Algoma Steel Group Inc.

Phone: 705.945.3300

E-mail: IR@algoma.com

Algoma Steel Inc. | 105 West Street, Sault Ste. Marie, ON, Canada P6A 7B4 | T: 705-945-2351 F: 705-945-2203 | algoma.com

YOUR PARTNER IN STEEL. SINCE 1901

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS

The following Management’s Discussion and Analysis (“MD&A”) contains information regarding the financial position and financial performance of Algoma Steel Group Inc. and its consolidated subsidiaries and unless the context otherwise requires, all references to “Algoma,” “the Company,”, “we,” “us,” or “our” refer to Algoma Steel Group Inc. and its consolidated subsidiaries.

We publish our condensed interim consolidated financial statements in Canadian dollars. In this MD&A, unless otherwise specified, all monetary amounts are in Canadian dollars, all references to “C$,” mean Canadian dollars and all references to “$” or “US$” and mean U.S. dollars.

The following MD&A provides the Company’s management perspective on the financial position and financial performance of the Company and its consolidated subsidiaries for the three and nine month periods ended December 31, 2023 and December 31, 2022. This MD&A provides information to assist readers of, and should be read in conjunction with, the Company’s December 31, 2023 condensed interim consolidated financial statements and the accompanying notes thereto and the March 31, 2023 audited consolidated financial statements and the accompanying notes thereto. The condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) and the financial information included in this MD&A is derived from the condensed interim consolidated financial statements, except as otherwise noted.

This discussion of the Company’s business may include forward-looking information with respect to the Company, including its operations and strategies, as well as financial performance and conditions, which are subject to a variety of risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Information” below. Readers are directed to carefully review the sections entitled “Non-IFRS Financial Measures” included elsewhere in this MD&A. For a discussion of risks and uncertainties that may affect the Company and its financial position and results, refer to “Risk Factors” in the annual information form (the “Annual Information Form”) filed by the Company with the applicable Canadian securities regulatory authorities (available under the Company’s System for Electronic Document Analysis and Retrieval (“SEDAR+”) profile at www.sedarplus.ca) and filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) as part of the Company’s annual report on Form 40-F (available on the SEC’s EDGAR website at www.sec.gov), as well as in the other documents Algoma has filed with the OSC and the SEC.

This MD&A is dated as of February 6, 2024. This document has been approved and authorized for issue by the Board of Directors on February 6, 2024. Events occurring after this date could render the information contained herein inaccurate or misleading in a material respect.

Functional Currency

The Company’s functional currency is the US dollar, which reflects the Company’s operational exposure to the US dollar. The Company uses the Canadian dollar as its presentation currency. In accordance with IFRS, all amounts presented are translated to Canadian dollars using the current rate method whereby all revenues, expenses and cash flows are translated at the average rate that was in effect during the period or presented at their Canadian dollar transactional amounts and all assets and liabilities are translated at the prevailing closing rate in effect at the end of the period. Equity transactions have been translated at historical rates. The resulting net translation adjustment has been reflected in other comprehensive income or loss.

The currency exchange rates for the relevant periods of fiscal 2024 and fiscal 2023 are provided below:

1

Cautionary Note Regarding Forward-Looking Information

This MD&A contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and “forward-looking information” under applicable Canadian securities legislation (collectively, “forward-looking statements”), that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and strategic objectives, Algoma’s expectation to pay a quarterly dividend, the expected timing of the EAF (as defined below) transformation and the resulting increase in raw steel production capacity and reduction in carbon emissions. In some cases, you can identify forward-looking statements by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “pipeline,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” or the negative of these terms or other similar expressions. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances. The statements we make regarding the following matters are forward-looking by their nature:

2

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. The forward-looking statements are based on our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the risks provided under “Risk Factors” in the Annual Information Form.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward- looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying assumptions will prove to be correct. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this MD&A, to conform these statements to actual results or to changes in our expectations.

3

Overview of the Business

Algoma Steel Group Inc., formerly known as 1295908 B.C. Ltd. (the “Company”), was incorporated on March 23, 2021 under the Business Corporations Act of British Columbia solely for the purpose of purchasing Algoma Steel Holdings Inc. On May 24, 2021, the Company entered into a Merger Agreement (the “Merger”), by and among the Company, a wholly-owned subsidiary of the Company and Legato Merger Corp. (“Legato”). On October 19, 2021, the Company completed its merger with Legato, listing its common shares and warrants under the symbol ‘ASTL’ and ASTLW’, respectively, on the Toronto Stock Exchange (TSX) and the Nasdaq Stock Market (Nasdaq). Algoma Steel Group Inc. is the ultimate parent holding company of Algoma Steel Inc. and does not conduct any business operations.

Algoma Steel Inc. (“ASI”), the operating company and a wholly-owned subsidiary of Algoma Steel Holdings Inc., was incorporated on May 19, 2016 under the Business Corporations Act of British Columbia. ASI is an integrated steel producer with its active operations located entirely in Sault Ste. Marie, Ontario, Canada. ASI produces sheet and plate products that are sold primarily in Canada and the United States.

Strategic Initiatives

Electric Arc Furnace (“EAF”)

On November 10, 2021, the Company’s Board of Directors authorized the Company’s transformation to electric arc steelmaking (EAF Transformation Project), including the construction of two state-of- the-art electric-arc-furnaces (EAF) to replace its existing No. 7 blast furnace steelmaking operations. The EAF Transformation Project is expected to reduce Algoma’s carbon emissions by approximately 70%.

EAF steelmaking is a method of producing steel by melting scrap metal and other metallic inputs using an electric arc. This process is widely used in modern steel production. The EAF steelmaking facility is being built on vacant land adjacent to the current steelmaking facility to mitigate disruption to current operations and will be integrated into existing downstream equipment and facilities, thereby reducing capital expenditure requirements.

The EAF Transformation Project is expected to improve product mix, reduce fixed costs, provide significant carbon tax savings, increase production capacity and decrease the Company’s environmental footprint. The Company anticipated a 30-month construction phase for the EAF facility, with construction having started in April 2022 and commencement of start-up activities to begin prior to calendar year-end 2024 and expects to transition away from its current blast furnace steelmaking thereafter as increased electric power from the provincial grid supplying the Company becomes available.

The following paragraphs outline key elements and milestones of the EAF Transformation Project:

Technology

On December 2, 2021, the Company announced that it has selected Danieli & C. Officine Meccaniche S.p.A. (“Danieli”) as the sole technology provider for the EAF steelmaking facility. In connection with this agreement, Danieli will supply its latest technology solutions including AC-Digimelter technology powered by Q-One digital power systems and Q-SYM automated scrap yard. Various EAF and power components have been received on the Company’s site ready for installation, including two EAF charging cranes with lifting capacity of 570 short tons each to facilitate further installation of the EAF components.

4

Construction and Environmental Permitting

The contract for the structural building housing the EAF Transformation was awarded on April 25, 2022, to Hamilton, Ontario-based Walters Group Inc. (“Walters”). Walters is responsible for fabricating and erecting the main building structure in addition to the necessary dust collection hoods. Pursuant to the fixed-price contract, Walters is using Algoma’s steel plate products in the fabrication of heavy structural components, and will work with local industrial contractor, SIS Manufacturing Inc., for the fabrication of these key elements. As of December 31, 2023, approximately 90% of the EAF building structural steel has been erected.

On March 13, 2023, the Company announced the appointment of EllisDon as Construction Manager for completion of the EAF Transformation Project. The Construction Manager role is central to the successful planning, execution, and completion of the various construction projects. Their responsibilities encompass various aspects of project management and oversight to ensure that construction projects are completed safely, on time, within budget, and to the required quality standards.

The Company is progressing its applications for environmental operational permits through the Province’s Ministry of Environment, Conservation and Parks.

Budget and Project Financing

As previously updated, the Company plans to invest approximately C$825-C$875 million in the EAF Transformation Project, funded with previously announced financing commitments below, proceeds from the Merger, and cash from operations.

The Company previously secured an agreement with the Government of Canada through the Ministry of Innovation, Science and Economic Development Canada (ISED), whereby the Company will receive up to C$200.0 million in the form of a loan to support the EAF Transformation Project. The loan is provided through the Net Zero Accelerator Initiative of the Federal Strategic Innovation Fund (the “Federal SIF”). The repayment period will commence upon the earlier of the Company having access to full power from the provincial electricity grid to operate the EAF independently, or January 1, 2030. The annual repayment is further dependent on the Company’s performance in reducing its greenhouse gas emissions. As of December 31, 2023, the Company has received C$124.4 million from the ISED loan.

In addition, the Company previously entered into an agreement (CIB Loan) with the Canada Infrastructure Bank (CIB) with access up to C$220 million in loan financing towards the EAF Transformation Project. Pursuant to the terms of the CIB Loan, as of December 31, 2023, the amount of credit available under the CIB Loan has been reduced to approximately C$18.2 million as a result of restricted payments in respect of dividends and share repurchases completed by the Company through normal course market purchases and Substantial Issuer Bid for the Company’s common shares completed in September 2022.

The EAF Transformation project has advanced through fiscal 2024, with approximately 86% of the budgeted project cost contracted and the remainder uncontracted as of December 31, 2023. The Company continues to expect that the completion of the EAF project will be funded with cash-on-hand, cash generated through operations, Federal SIF and available borrowings under the Company’s existing undrawn and recently upsized and extended ABL credit facility.

From the inception of the EAF Transformation Project through December 31, 2023, the Company invested a total of C$509.9 million (excluding the benefit of Government loans). As of December 31, 2023, the Company had C$93.8 million in total available Government financing including C$75.6 million loan under the Federal Strategic Innovation Fund and C$18.2 million under the CIB credit facility.

5

Access to Electricity

The Company upgraded its internal power generation asset known as Lake Superior Power (LSP Plant) with two LM6000PC aeroderivative gas turbines, multiple control systems, and a full rewind of the No. 2 generator to provide 110-115 MW towards the operation of the EAFs. The LSP Plant combined with current 115kV grid power are expected to provide sufficient power to run both electric arc furnaces in an alternating mode, thereby allowing the Company to produce the same volume of steel as produced today as it reduces output from its No. 7 Blast Furnace. In June 2023, the Company received conditional approval from the Independent Electricity System Operator (IESO) to connect the EAFs to the current 115kV electricity grid with the LSP Plant.

Together the IESO-approved connection and Algoma’s power upgrade are expected to provide sufficient power to run both electric arc furnaces in an alternating mode.

The Company is progressing its discussions with the Independent Electricity System Operator (“IESO”), Ontario independent electricity regulator, as well as with the Ministry of Energy in respect of securing more grid power to realize the full potential of the EAF Transformation Project. On September 28, 2023, the Company received conditional approval of the next phase of the Company’s EAF Connection Proposal (CAA ID: 2021-704), providing for connecting the EAF load facility with electricity supplied from the local 230kV transmission line to be constructed and operated by PUC Transmission LP.

Significant progress has continued on long term regional power access for Northeast and Eastern Ontario. On October 23, 2023, the Ontario provincial government announced that it has issued an Order-in-Council declaring three regional transmission line projects as priorities, which includes one new line in eastern Ontario and two new lines in northeastern Ontario. These lines are expected to enable economic growth activities including among other things the production of clean steel at Algoma. The Order-in-Council will streamline the Ontario Energy Board’s (OEB) regulatory approval process for these lines. The government has also directed the OEB to amend Hydro One Network Inc. (Hydro One)’s transmission license to designate it as the transmitter responsible for the development of the three lines.

Iron Ore Extension

On October 2, 2023, the company announced a two-year extension of its existing iron ore purchase contract with United States Steel Corporation (“U. S. Steel”) (NYSE: X), with an option to further extend for a third year solely at Algoma’s discretion. The extended purchase contract is anticipated to cover the expected volumes of iron ore required to complete Algoma’s transition from blast furnace to EAF steelmaking.

The extension with U. S. Steel represents another strategic milestone for Algoma as it continues on its transformative journey toward sustainable steel production through EAF steelmaking.

Plate Mill Modernization

In 2019, the Company started a plate mill modernization project (the “PMM Project”) which is to be completed in two phases and plans to invest a total of approximately C$135 million, which will be partly funded by government loan facilities totalling approximately C$50 million. This strategic initiative will enhance the capacity and quality of the Company’s discrete plate product line, which is a differentiated product capability and a key source of competitive advantage. The PMM Project will allow the Company to satisfy higher product quality requirements of its customers with respect to surface and flatness, increase high strength capability with availability of new grades, ensure reliability of plate production with direct ship capability and increase overall plate shipment capacity through debottlenecking and automation.

The modernization process is comprised of two phases: the first being a quality focus and the second phase a productivity focus. The first phase has been completed, and focused on quality, with installation and commissioning upgrades of a new primary slab de-scaler (to improve surface quality), automated surface inspection system (to detect and map surface quality), an in- line hot leveler (to improves flatness), and automation of the 166 inch plate mill (which expands the Company’s grade offering).

The second phase focuses on productivity enhancement and will be completed in two separate minor outages throughout 2024 to decrease commissioning risks and to provide for lesser impact to our customers. The Company has installed and is presently commissioning the inline dividing shear and plate piler. The first 20-day outage involves installation and commissioning upgrades of onboard descaling systems for the 2Hi and 4Hi roughing roll stands; mill alignment and work roll offset at the 4Hi mill; and new cooling beds coupling the plate mill and shear line, dividing shear, plate piler and automated marking machine. The second minor outage in 2024 involves installing and commissioning the new 4Hi DC drive.

6

Lime Production

In June, 2023, the Company completed a C$16 million refurbishment project of its lime kiln production plant that processes limestone and other calcium carbonate-rich materials to produce quicklime (calcium oxide, CaO) and dolomitic lime (a mixture of calcium and magnesium oxides). Lime is an essential component of the steelmaking process, as it is used in various stages to remove impurities, control the slag composition,

and adjust the chemical balance in the steelmaking process. The Company has a constant and growing demand for lime product as it progresses through its transformation to EAF steelmaking.

Key Leadership and Governance Announcements

Effective December 1, 2023, Chris Ford was appointed Vice President – Commercial succeeding Rory Brandow upon announcing his retirement.

Effective December 31, 2023, Andrew Schultz has retired from the Board of Directors.

Environmental Matters

Steel producers such as Algoma are subject to numerous environmental laws and regulations (“Environmental Law”), including federal and provincial, relating to the protection of the environment. The Company can incur regulatory liability as well as civil liability for contamination on-site (soil, groundwater, indoor air), contaminant migration and impacts off-site including in respect of groundwater, rivers, lakes, other waterways, and air emissions.

On June 9, 2022, the Company experienced an incident where an oil-based lubricant was released from our hot mill in Sault Ste. Marie. The oil entered our water treatment facility, and some quantity of the oil was discharged into the St. Mary’s River. Following the discharge, traffic on the river was temporarily halted, the local public health authority issued a water advisory and a nearby municipality issued a precautionary emergency declaration regarding its municipal water supply. We actively worked with our response partners deploying equipment and resources to contain and mitigate the effects on the waterway and neighboring communities and to clean up the released oil, while working with local, provincial, and federal regulatory authorities. The public health authorities lifted the water advisory on June 21, 2022 and the US Coast Guard did not see any impact to shoreline or marine wild life. The provincial and federal regulators (Ontario’s Ministry of the Environment, Conservation and Parks, and Environment and Climate Change Canada) are each currently investigating this incident, but have not laid any charges to date. If charges are laid, we may be subject to regulatory fines and other penalties and/or orders. We may also be subject to private actions in the future as a result of the incident. The financial and other impacts of this incident are currently unknown.

Fatal Incident Involving an Employee of a Contractor

The Company reported on June 16, 2023 a fatal incident involving an employee of a contractor, retained to perform specialized maintenance work cleaning an out-of-service gas line. We are actively investigating the fatal accident internally, and providing full cooperation with provincial authorities as they investigate.

Environmental, Social and Governance (“ESG”) Report

On September 12th, 2023 Algoma published its inaugural ESG report, marking a significant milestone in our journey towards sustainable and responsible business practices. At Algoma, we firmly acknowledge that ESG factors encompass a broad spectrum of risks and opportunities, impacting not only our organization but also our valued stakeholders, including investors, customers, suppliers, employees, governments, and the communities where we operate. Our unwavering commitment is to conduct our business activities with careful and conscientious consideration of these ESG factors.

7

Our vision extends beyond mere corporate responsibility; we aspire to play a pivotal role in shaping a sustainable and environmentally responsible future for Canadian steel production. Algoma is embarking on a transformative investment in EAF steelmaking, a significant step towards reducing our environmental footprint. We pledge to continually innovate and incorporate eco-friendly practices throughout our production processes. Simultaneously, we remain steadfast in our dedication to the health and safety of our workforce, the prosperity of communities we operate in, and the cultivation of a diverse, inclusive, and equitable workforce.

In development of our inaugural ESG report, we have conducted a comprehensive ESG materiality assessment. This rigorous assessment has enabled us to pinpoint and prioritize the ESG factors with the greatest potential to affect our business, ensuring that we generate lasting value for our investors while upholding our commitment to long-term sustainability. This foundational work forms the bedrock of our overarching ESG strategy.

Transparency and accountability are integral to our ESG journey. Our reporting aligns with the Sustainability Accounting Standards Board (SASB) Standards and adheres to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) to the greatest extent feasible. We are actively engaged in ongoing efforts to further harmonize our practices with these frameworks. This report provides comprehensive insights into our ESG strategy, outlines our approach to mitigating ESG risks, and underscores our commitment to harnessing ESG opportunities.

Our ESG approach is firmly underpinned by robust governance structures that empower us to effectively oversee and manage ESG-related risks and opportunities. Our Board of Directors assumes ultimate accountability for ESG factors, including those related to climate change. The Nominating and Corporate Governance Committee plays a pivotal role in supporting the Board by overseeing Algoma’s ESG framework, collaborating with other Board Committees, and reporting on ESG matters to the full Board.

At Algoma, our journey towards a sustainable and responsible future is not just a commitment; it’s a critical component of our strategy. We recognize that ESG excellence is integral to our continued success, and we remain resolute in our pursuit of a brighter, more sustainable future for all.

Subsequent Event

On January 20, 2024, an incident occurred involving the structural collapse of a key support structure that carries various utilities crucial for our operations including the Company’s coke-making plant. The incident is currently under investigation by third parties to determine its origin and cause and the scene remains controlled for safety reasons. The unforeseen structural collapse, coupled with attendant fires and explosions, did not result in any injuries but has had a significant effect on our operations.

The incident has resulted in significant disruptions to various utilities that are essential for our coke-making and ironmaking operations. These disruptions have, unfortunately, adversely affected and curtailed other critical utilities as well. Among other things, for safety reasons, blast furnace operations were suspended at the time of the incident. The blast furnace experienced operational challenges upon initial restart due to unforeseen impacts related to the piping collapse.

Limited production of coke resumed at three coke-production units on January 23, which, when combined with inventories on hand and the availability of third-party coke supplies, is currently expected to fulfill the Company’s requirements for normal steelmaking production while the repair plan is developed. All necessary repairs to the blast furnace have been completed, and the furnace is now undergoing a gradual restart process. Additional energy will be added to the furnace as conditions permit. Based on current information, usable hot metal is expected to be produced within the next seven days, with a return to full production anticipated within the next two weeks. Algoma has standard insurance coverage that is intended to address circumstances such as these, including business interruption insurance. The Company is in the process of submitting claims under its insurance policies for covered losses.

The extent of the damages and the full scope of the incident are still being assessed and we are actively working to restore normalcy as swiftly as possible.

We are making every effort to expedite the investigation, address the aftermath, and resume normal operations at the earliest possible time. The outage at the blast furnace and limited coke production are, however, collectively expected to negatively impact shipments, costs and profitability.

Factors Affecting Financial Performance

The Company’s costs are primarily driven by commodity prices, including the price of iron ore, coal, electricity and natural gas, and inflation or other fluctuations in the prices of key raw materials and other inputs essential to our operations can have a substantial impact on our profitability and overall financial performance. Inflationary pressures on commodity raw material inputs can arise from various factors, including global supply and demand dynamics, geopolitical events, natural disasters, trade policies, and currency exchange rate fluctuations. These factors are often beyond our control and can lead to substantial price increases in raw materials, as well as challenges in managing our supply chain and inventory affecting our ability to secure adequate raw material supplies in a timely and cost-effective manner. Increased costs of raw materials can directly erode our profit margins, making it challenging to maintain competitive pricing in the market.

8

North American steel pricing is largely dependent on global supply and demand, the level of steel imports into North America, economic conditions in North America, global steelmaking overcapacity, and increased raw material prices. North American steel producers compete with many foreign producers, including those in Europe, China and other Asian countries. Competition from foreign producers is periodically intensified by weakening regional economies of their surrounding countries, and resultant decisions by these foreign producers with respect to export volumes and pricing possibly more influenced by political and economic policy considerations than by prevailing market conditions.

Global steel production decreased 1.1% in the first half of calendar 2023 compared to the first half of calendar 2022 to 943.9 million metric tonnes. China represents approximately 57% of global crude steel production. (source: Worldsteel Association “June 2023 crude steel production” July 25, 2023). According to the Organization for Economic Cooperation and Development (OECD) global steelmaking capacity continues to increase at a rapid pace in a period of weakening steel market conditions. A total of 329 steel investment projects are either currently underway or in the planning stages around the world. Excess capacity is a structural issue that continues to dampen prospects for the global steel industry. OECD reported that global capacity utilization was 74.3% in 2022, with excess capacity of approximately 632 million metric tonnes in 2022, which is up from 2021 levels and is the equivalent to approximately 40 times the size of the Canadian steel industry.

Overall Results

Net (Loss) Income

The Company’s net loss for the three month period ended December 31, 2023 was C$84.8 million compared to net loss of C$69.8 million for the three month period ended December 31, 2022, resulting in a C$15.0 million increase of net loss. The increase is primarily due to the change in fair value of the warrant liability (C$14.0 million), the change in fair value of the share-based compensation liability (C$11.5 million), the change in fair value of the earnout liability (C$6.4 million), the decrease in income tax recovery (C$5.1 million), the increase in foreign exchange loss (C$4.1 million) and the increase in finance costs (C$1.4 million). This was offset, in part, due to the decrease in loss from operations (C$28.8 million), for reasons described below.

The Company’s net income for the nine month period ended December 31, 2023 was C$77.2 million compared to net income of C$318.9 million for the nine month period ended December 31, 2022, resulting in a C$241.7 million decrease of net income. The decrease is primarily due to a decrease in income from operations (C$104.6 million), for reasons described below, the change in fair value of the warrant liability (C$70.3 million), the increase in foreign exchange loss (C$55.3 million), the change in fair value of the share-based compensation liability (C$25.6 million) and the change in fair value of the earnout liability (C$12.9 million). This was offset, in part, due to the decrease in income tax expense (C$33.5 million).

Income (Loss) from Operations

The Company’s loss from operations for the three month period ended December 31, 2023 was C$36.9 million compared to loss from operations of C$65.7 million for the three month period ended December 31, 2022, a decrease of C$28.8 million. The decrease is primarily due to increased steel shipment volumes as a result of improved market conditions and resolving the temporary downstream finishing constraints for plate that occurred during the three month period ended December 31, 2022. Further, higher cost of steel revenue as a result of increased shipment volumes was partially offset by a decrease in pricing for natural gas, purchased coke, alloys and power in the three month period ended December 31, 2023.

The Company’s income from operations for the nine month period ended December 31, 2023 was C$164.2 million compared to income from operations of C$268.8 million for the nine month period ended December 31, 2022, a decrease of C$104.6 million. The decrease is primarily due to increased cost of sales (C$170.1 million), which is a result of increased shipment volumes and an increase in the purchase price of key inputs such as coal and ore pellets at the beginning of the year. In addition, the decrease in income from operations was affected by continued softening in steel pricing. This was offset, in part, by increased pension and post-employment benefit expenses through ratifying the collective bargaining agreements (C$53.3 million) in the nine month period ended December 31, 2022.

9

Non-IFRS Financial Measures

In this MD&A, we use certain non-IFRS measures to evaluate the performance of the Company. These terms do not have any standardized meaning prescribed within IFRS and, therefore, may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing a further understanding of our financial performance from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported in accordance with IFRS. As described below, the term “Adjusted EBITDA” is a financial measure utilized by the Company in reporting its financial results that is not defined by IFRS. The terms “Average Net Sales Realization” (“NSR”) and “Cost Per Ton of Steel Products Sold” are financial measures utilized by the Company in reporting its financial results that are not defined by IFRS. Average Net Sales Realization, as defined the Company, refers to steel revenue less freight revenue per steel tons shipped. Average Net Sales Realization is included because it allows management and investors to evaluate our selling prices per ton of steel products sold, excluding geographic impact of freight charges, in order to enhance comparability when comparing our sales performance to that of our competitors. Cost Per Ton of Steel Products Sold, as defined by the Company, refers to cost of steel revenue less freight, depreciation, carbon tax and past service costs for pension and post-employment benefit adjustments (included in cost of steel revenue) per steel tons shipped. Cost Per Ton of Steel Products Sold allows management and investors to evaluate the Company’s cost of steel products sold on a per ton basis, excluding the items that we exclude when calculating Adjusted EBITDA, to evaluate our operating performance and to enhance the comparability of our costs over different time periods. We consider each of Average Net Sales Realization and Cost Per Ton of Steel Products Sold to be meaningful measures to assess our operating performance in addition to IFRS measures. A reconciliation of each of Average Net Sales Realization and Cost Per Ton of Steel Products Sold to their most comparable IFRS financial measures are contained in this MD&A.

Adjusted EBITDA, as defined by the Company, refers to net income or loss before depreciation of property, plant, equipment and amortization of intangible assets, finance costs, interest on pension and other post-employment benefit obligations, income taxes, foreign exchange loss (gain), finance income, carbon tax, changes in fair value of warrant, earnout and share-based compensation liabilities, transaction costs, listing expense, past service costs – pension, past service costs – post-employment benefits and share-based compensation related to Omnibus Long Term Incentive Plan. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue for the corresponding period. Adjusted EBITDA per ton is calculated by dividing Adjusted EBITDA by tons of steel products sold for the corresponding period. Adjusted EBITDA is not intended to represent cash flow from operations, as defined by IFRS, and should not be considered as alternatives to income from operations, or any other measure of performance prescribed by IFRS. Adjusted EBITDA, as defined and used by the Company, may not be comparable to Adjusted EBITDA as defined and used by other companies. We consider Adjusted EBITDA to be a meaningful measure to assess our operating performance in addition to IFRS measures. These measures are included because we believe it can be useful in measuring our operating performance and our ability to expand our business and provide management and investors with additional information for comparison of our operating results across different time periods and to the operating results of other companies. Adjusted EBITDA is also used by analysts and our lenders as measures of our financial performance. In addition, we consider Adjusted EBITDA margin and Adjusted EBITDA per ton, to be useful measures of our operating performance and profitability across different time periods that enhance the comparability of our results. For a reconciliation of Adjusted EBITDA to its most comparable IFRS financial measures, see “Adjusted EBITDA” presented in this MD&A.

Adjusted EBITDA, Average Net Sales Realization and Cost Per Ton of Steel Products Sold have limitations as analytical tools and should not be considered in isolation from, or as alternatives to, net income, cash flow from operations or other data prepared in accordance with IFRS. Some of these limitations are:

10

Steel Revenue and Cost of Sales

Revenue and steel revenue increased by 8.4% and 8.8%, respectively, and steel shipment volumes increased by 12.6% during the three month period ended December 31, 2023 as compared to the three month period ended December 31, 2022. The Company’s average NSR on steel sales per ton shipped was C$1,079 for the three month period ended December 31, 2023 (December 31, 2022 - C$1,116), a decrease of 3.3%. The overall increase in revenue and steel revenue is mainly due to increased steel shipment volumes as a result of improved market conditions and resolving the temporary downstream finishing constraints for plate that occurred during the three month period ended December 31, 2022.

11

Revenue and steel revenue increased by 3.5% and 1.9%, respectively, and steel shipment volumes increased by 14.2% during the nine month period ended December 31, 2023 as compared to the nine month period ended December 31, 2022. The Company’s average NSR on steel sales per ton shipped was C$1,210 for the nine month period ended December 31, 2023 (December 31, 2022 - C$1,356), a decrease of 10.8%. The overall increase in revenue is mainly due to reasons as discussed above, offset, in part, by softening steel prices.

For the three month period ended December 31, 2023, the Company’s cost of steel revenue increased by 1.7% to C$565.3 million (December 31, 2022 - C$556.0 million), while cost of steel products sold decreased to C$530.1 million (December 31, 2022 – C$530.2 million). The overall increase in cost of steel revenue is mainly due to increased shipment volumes, offset, in part, by a decrease in pricing for natural gas, purchased coke, alloys and power.

For the nine month period ended December 31, 2023, the Company’s cost of steel revenue and cost of steel products sold increased by 8.3% to C$1,730.1 million (December 31, 2022 - C$1,597.8 million) and 10.5% to C$1,631.8 million (December 31, 2022 – C$1,476.2 million), respectively, for reasons as discussed above and higher purchase prices for coal and ore pellets at the beginning of the year.

Non-steel Revenue

The Company’s non-steel revenue for the three month period ended December 31, 2023 was C$10.4 million (December 31, 2022 – C$12.1 million). The decrease of C$1.7 million was mainly due to decreased revenue on braize and kish products. This was offset, in part, by increase in tar sales.

The Company’s non-steel revenue for the nine month period ended December 31, 2023 was C$47.3 million (December 31, 2022 – C$31.9 million). The increase of C$15.4 million was mainly due to increased revenue on braize, tar, scrap and ore fines.

Administrative and Selling Expenses

As illustrated in the table above, the Company’s administrative and selling expenses for the three month period ended December 31, 2023, were C$28.5 million (December 31, 2022 - C$21.7 million). The increase in administrative and selling expenses of C$6.8 million is mainly due to an increase in personnel expenses (C$5.0 million), insurance (C$1.3 million) and other administrative and selling (C$0.9 million). This was offset, in part, by a decrease in professional, consulting, legal and other fees (C$0.2 million).

For the nine month period ended December 31, 2023, the Company’s administrative and selling expenses were C$82.9 million (December 31, 2022 - C$74.3 million). The increase in administrative and selling expenses of C$8.6 million is mainly due to an increase in insurance (C$2.8 million), other administrative and selling (C$3.8 million), and personnel expenses (C$2.1 million).

12

Finance Costs, Finance Income, Interest on Pension and Other Post-employment Benefit Obligations, and Foreign Exchange Gains and Losses

The Company’s finance costs represent interest cost on the Company’s Revolving Credit Facility described in the section entitled “Capital Resources - Financial Position and Liquidity” included elsewhere in this MD&A. Finance costs also include the amortization of transaction costs related to the Company’s debt facilities and the accretion of the benefits in respect of the Company’s governmental loan facilities in respect of the interest free loan issued by, and the grant given by the Canadian federal government as well as the low interest rate loan issued from the Ontario provincial government, all of which are discussed below (Financial Resources and Liquidity - Cash Flow Used in Investing Activities) and the unwinding of discounts on the Company’s environmental liabilities.

As illustrated in the table above, the Company’s finance costs for the three month period ended December 31, 2023 were C$5.4 million (December 31, 2022 - C$4.0 million). The increase of C$1.4 million in finance costs is due to an increase in other interest expense (C$1.0 million), a result of updating the interest rate that is used to calculate the present value for the provincial loan every November. Furthermore, there was an increase in accretion of government loan benefits (C$0.4 million).

For the nine month period ended December 31, 2023, the Company’s finance costs were C$15.9 million (December 31, 2022 - C$13.0 million). The increase of C$2.9 million in finance costs is primarily attributable to increased accretion of government loan benefits (C$1.5 million) and an increase in other interest expense (C$1.3 million), for reasons mentioned above.

The Company’s finance income for the three month period ended December 31, 2023, was C$2.4 million (December 31, 2022 – C$3.9 million). The decrease of C$1.5 million in finance income is primarily due to a reduction in deposits.

The Company’s finance income for the nine month period ended December 31, 2023, was C$8.8 million (December 31, 2022 – C$10.4 million). The decrease of C$1.6 million in finance income is primarily due to a reduction in deposits, offset in part by higher interest rates.

The Company’s interest on pension and other post-employment benefit obligations for the three and nine month periods ended December 31, 2023 was C$4.8 million and C$14.4 million, respectively, compared to C$5.0 million and C$12.4 million, respectfully, for the three and nine month periods ended December 31, 2022, due to an increase in discount rates as at March 31, 2023 that was used to determine the 2024 fiscal year pension benefit expense and the impact of the signing of the Collective Bargaining Agreement (“CBA”) on August 1, 2022 that increased the obligations.

The Company’s foreign exchange loss for the three month period ended December 31, 2023 was C$14.7 million (December 31, 2022 - $10.6 million). The foreign exchange loss for the nine month period ended December 31, 2023 was C$14.1 million (December 31, 2022 – loss of C$41.2 million). These foreign exchange movements reflect the effect of US dollar exchange rate fluctuations on the Company’s Canadian dollar denominated monetary assets and liabilities.

13

Pension and Post-Employment Benefits

As illustrated in the table above, the Company’s pension expense for the three month periods ended December 31, 2023 and December 31, 2022 were C$6.3 million and C$6.5 million, respectively, representing a decrease of C$0.2 million. The Company’s post-employment benefit expense for the three month periods ended December 31, 2023 and December 31, 2022 were C$3.4 million and C$3.2 million, respectively, representing an increase of C$0.2 million.

For the nine month periods ended December 31, 2023 and December 31, 2022, the Company’s pension expense was C$18.9 million and C$67.1 million, respectively, representing a decrease of C$48.2 million. The Company’s post-employment benefit expense for the nine month periods ended December 31, 2023 and December 31, 2022 were C$10.2 million and C$13.4 million, respectively, representing a decrease of C$3.2 million. The decrease in pension expense and post-employment benefit expense are due to ratifying the CBA in August 2022 that extended indexation to July 1, 2027 that resulted in a past service cost of C$49.5 million and C$3.8 million, respectively. In addition, the change is also a result of an increase in discount rates as at March 31, 2023 that were used to determine the 2024 fiscal year pension expense and post-employment benefit expense.

As disclosed in Note 3 to the March 31, 2023 consolidated financial statements, all actuarial gains and losses that arise in calculating the present value of the defined benefit pension obligation net of assets and the defined benefit obligation in respect of other post-employment benefits, including the re-measurement components, are recognized immediately in other comprehensive income or loss. In accordance with IFRS, the Company makes an assessment at each reporting period-end as to whether the accrued pension liability and the accrued other post-employment benefit obligation have been significantly impacted by changes in market discount rates, curtailments, settlements, actual returns on defined benefit pension plan assets or other one-off events.

14

For the three month period ended December 31, 2023, the Company recorded an actuarially determined loss to the accrued defined pension liability and accrued other post-employment benefit obligation in other comprehensive income of C$53.6 million (December 31, 2022 – gain of C$35.7 million), a difference of C$89.3 million. The change is primarily due to a decrease in discount rates, slightly offset by higher asset returns.

For the nine month period ended December 31, 2023, the Company recorded actuarially determined loss to the combined accrued defined pension liability and accrued other post-employment benefit obligation in other comprehensive loss of C$54.0 million (December 31, 2022 – loss of C$14.3 million), a difference of C$39.7 million, for reasons mentioned above.

These adjustments are required by IFRS when the accrued liability is significantly impacted by changes in market discount rates, curtailments, settlements, actual returns on defined benefit pension plan assets or other one-off events.

Carbon Taxes

On June 28, 2019, the Company became subject to the Federal Greenhouse Gas Pollution Pricing Act (the “Carbon Tax Act”). The Carbon Tax Act was enacted with retroactive effect to January 1, 2019. The Company has chosen to remove the costs associated with the Carbon Tax Act from Adjusted EBITDA to facilitate comparison with the results of its competitors in jurisdictions not subject to the Carbon Tax Act. Since the introduction of the Carbon Tax Act, Ontario’s Emissions Performance Standards (EPS) program was developed to regulate greenhouse gas (GHG) emissions from large industrial facilities by setting emissions limits that are the basis for the compliance obligations of those facilities. The program was developed as an alternative to the federal output-based pricing system (OBPS). The EPS program came into full effect on January 1, 2022 and Algoma is now subject to compliance under the EPS.

For the three month period ended December 31, 2023, total Carbon Tax recognized in cost of sales was C$3.5 million (December 31, 2022 - C$1.2 million). The change is mainly due to an increase in carbon tax per ton and a true-up of the estimated cost in the three month period ended December 31, 2023. Carbon Tax is primarily a function of the volume of our production.

For the nine month period ended December 31, 2023, total Carbon Tax recognized in cost of sales was C$18.2 million (December 31, 2022 – C$4.3 million). The change in carbon tax is due to an increase in carbon tax per ton and a true-up of the estimated cost in the nine month period ended December 31, 2023.

Income Taxes

For the three month period ended December 31, 2023, the Company’s deferred income tax expense and current income tax recovery were C$17.3 million and (C$29.8) million, respectively, compared to deferred income tax expense and current income tax recovery of C$4.9 million and (C$22.5) million, respectively, for the three month period ended December 31, 2022 due to net loss before tax of (C$97.3) million for the three month period ended December 31, 2023, compared to net loss before tax of (C$87.4) million for the three month period ended December 31, 2022.

For the nine month period ended December 31, 2023, the Company’s deferred income tax expense and current income tax expense were C$6.4 million and C$32.3 million, respectively, compared to deferred income tax recovery and current income tax expense of (C$11.2) million and C$83.4 million, respectively, for the nine month period ended December 31, 2022 due to net income before tax of C$115.9 million for the nine month period ended December 31, 2023, compared to income before tax of C$391.1 million for the nine month period ended December 31, 2022.

Share Capital

The authorized share capital of the Company consists of an unlimited number of common shares without par value and an unlimited number of preferred shares without par value issuable in series.

15

As at December 31, 2023, there were 104,038,495 common shares issued and outstanding, and no preferred shares issued and outstanding.

Warrants

As at December 31, 2023, 24,179,000 Warrants remain outstanding with an estimated fair value of $1.84 per Warrant based on the market price of the Warrants, for which the Company recognized a liability of C$58.8 million ($44.5 million) (March 31, 2023 - C$57.3 million; $42.3 million) in warrant liability on the condensed interim consolidated statements of financial position. For the three month period ended December 31, 2023, a loss of C$20.4 million (December 31, 2022 – C$6.4 million) on change in the fair value of the warrant liability is presented in the condensed interim consolidated statements of net (loss) income. For the nine month period ended December 31, 2023, a loss of C$3.2 million (December 31, 2022 – gain of C$67.1 million) on change in the fair value of the warrant liability is presented in the condensed interim consolidated statements of net (loss) income. The Warrants will expire on the fifth anniversary of the merger transaction which was completed on October 19, 2021, or earlier upon redemption or liquidation of the Trust Account.

Earnout

As at December 31, 2023, 1,391,632 earnout rights remain outstanding with an estimated fair value of $10.03 per unit based on the market price of the Company’s common shares, for which an earnout liability of C$18.5 million ($14.0 million) (March 31, 2023 - C$16.8 million; $12.4 million) was recognized on the condensed interim consolidated statements of financial position. In addition, 168,807 rights were exercised as of December 31, 2023. Loss on change in the fair value of the earnout liability for the three and nine month periods ended December 31, 2023 of C$6.2 million and C$3.5 million, respectively, are presented in the condensed interim consolidated statements of net (loss) income. Gain on change in the fair value of the earnout liability for the three and nine month periods ended December 31, 2022 of C$0.2 million and C$9.4 million, respectively, are presented in the condensed interim consolidated statements of net (loss) income.

Replacement Long Term Incentive Plan (“LTIP”)

As at December 31, 2023, 2,565,827 Replacement LTIP Awards remain outstanding with an estimated fair value of $10.03 per unit based on the market price of the Company’s common shares, for which the Company recognized a liability of C$34.0 million ($25.7 million) (March 31, 2023 - C$33.5 million; $24.7 million) in share-based payment compensation liability on the condensed interim consolidated statements of financial position. In addition, 537,618 units were exercised as of December 31, 2023. Loss on change in the fair value of the share-based payment compensation liability for the three and nine month periods ended December 31, 2023 of C$11.3 million and C$6.0 million, respectively, are presented in the condensed interim consolidated statements of net (loss) income. Gain on change in the fair value of the share-based payment compensation liability for the three and nine month periods ended December 31, 2022 of C$0.2 million and C$19.6 million, respectively, are presented in the condensed interim consolidated statements of net (loss) income.

Omnibus Long Term Incentive Plan (“LTIP”)

Deferred share units (“DSUs”)

For the three and nine month periods ended December 31, 2023, the Company granted 53,371 and 146,087 DSUs, respectively, under the Omnibus Plan to certain directors of the Company, with a grant date fair value based on the market price of the Company’s common shares on the day of the grant. Further, for the nine month period ended December 31, 2023, the Company converted 35,379 DSUs to capital stock upon the resignation of a director. On June 30, 2022, 75,192 DSUs under the Omnibus Plan were granted to certain Directors of the Company, with a grant date fair value based on the market price of the Company’s common shares on the day of grant.

For the three and nine month periods ended December 31, 2023, the Company recorded a share-based payment compensation expense of C$0.7 million and C$1.7 million, respectively, in administrative and selling expense on the condensed interim consolidated statements of net (loss) income and contributed deficit on the condensed interim consolidated statements of financial position. For the three and nine month periods ended

16

December 31, 2022, the Company recorded a share-based payment compensation expense of C$0.4 million and C$1.3 million, respectively, in administrative and selling expense on the condensed interim consolidated statements of net (loss) income and contributed deficit on the condensed interim consolidated statements of financial position.

As at December 31, 2023, a total of 326,335 DSUs were outstanding. No cancellations or forfeiture of DSUs have been recorded to date.

Restricted share units (“RSU”) and performance share units (“PSU”) FY2023 Plan

At December 31, 2023, 131,224 and 149,087 units of RSUs and PSUs, respectively, net of cancellations and forfeitures, remain outstanding for recognition over the remainder of the vesting period. Further, for the three and nine month periods ended December 31, 2023, the Company recorded share-based payment compensation expense of C$0.2 million and C$0.5 million, respectively, in administrative and selling expenses on the condensed interim consolidated statements of net (loss) income and contributed deficit on the condensed interim consolidated statements of financial position. For the three and nine month periods ended December 31, 2022, the Company recorded share-based payment compensation income of C$0.2 million and expense of C$2.1 million, respectively, in administrative and selling expenses on the condensed interim consolidated statements of net (loss) income and contributed deficit. No exercises of RSUs and PSUs have been recorded to date.

Restricted share units (“RSU”) and performance share units (“PSU”) FY2024 Plan

On March 31, 2023 the Board of Directors approved a grant of 457,935 and 404,211 restricted share units and performance share units, respectively, to various employees of the Company under the Omnibus Plan for the fiscal year ended March 31, 2024. At December 31, 2023, 459,797 and 409,932 units of RSUs and PSUs, respectively, remain outstanding for recognition over the remainder of the vesting period. Further, for the three and nine month periods ended December 31, 2023, the Company recorded share-based payment compensation expense of C$0.7 million and C$2.2 million, respectively (December 31, 2022 – nil for the three and nine month periods) in administrative and selling expenses on the condensed interim consolidated statements of net (loss) income and contributed deficit on the condensed interim consolidated statements of financial position. No exercises, cancellation or forfeiture of RSUs and PSUs have been recorded to date.

17

Adjusted EBITDA

The following table shows the reconciliation of Adjusted EBITDA to net income for the periods indicated:

18

Adjusted EBITDA for the three month period ended December 31, 2023 was (C$1.0) million, compared to (C$35.9) million for the three month period ended December 31, 2022, resulting in an increase of C$34.9 million. The Adjusted EBITDA margin for the three month periods ended December 31, 2023 and December 31, 2022 was (0.2%) and (6.3%), respectively. The Adjusted EBITDA per ton for the three month period ended December 31, 2023 was (C$1.9) and (C$78.3) for the three month period ended December 31, 2022. The increase in Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA per ton for the three month period ended December 31, 2023 compared to the three month period ended December 31, 2022 was due mainly to an increase in steel revenue (C$44.9 million), primarily as a result of increased steel shipments. This was offset, in part, by an increase in administrative and selling expenses (C$6.8 million) due to the same reasons mentioned above.

Adjusted EBITDA for the nine month period ended December 31, 2023 was C$271.1 million, compared to C$404.5 million for the nine month period ended December 31, 2022, resulting in a decrease of C$133.4 million. The Adjusted EBITDA margin for the nine month periods ended December 31, 2023 and December 31, 2022 was 12.5% and 19.3%, respectively. The Adjusted EBITDA per ton for the nine month period ended December 31, 2023 was C$165.9 and C$282.7 for the nine month period ended December 31, 2022. The decrease in Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA per ton for the nine month period ended December 31, 2023 compared to the nine month period ended December 31, 2022 was due primarily to an increase in the cost of steel products sold (C$155.6 million) and an increase administrative and selling expenses (C$8.6 million) due to the same reasons mentioned above. This was offset, in part, by an increase in steel revenue (C$36.3 million) for the same reasons mentioned above.

Financial Resources and Liquidity

Summary of Cash Flows