Algoma Central Corporation — Management Reports 2022

Feb 28, 2022

ALGOMA CENTRAL CORPORATION Management's Discussion & Analysis

For the Years Ended December 31, 2021 and 2020

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Table of Contents

Table of Contents
General	1
Business Profile	1
Important Information About This MD&A	1
Select Financial and Operational Highlights	4
Stock Market Highlights	7
Adjusted Performance Measures	8
Business Segment Discussion
Domestic Dry-Bulk	9
Product Tankers	11
Ocean Self-Unloaders	13
Global Short Sea Shipping	15
Investment Properties	17
Corporate	17
Consolidated	18
Summary of Quarterly Results	19
Contingencies	19
Capital Resources	19
Transactions with Related Parties	19
Financial Condition, Liquidity and Capital Resources	19
Normal Course Issuer Bid	20
Commitments	21
Critical Accounting Estimates	21
Disclosure Controls and Procedures and Internal Controls over Financial Reporting	21
Derivative Financial Instruments	22
Risks and Uncertainties	22
Labour Update	24

General

This Management’s Discussion and Analysis (“MD&A”) of the Company should be read in conjunction with its Consolidated Financial Statements for the years ended December 31, 2021, and 2020 and related notes thereto and has been prepared as at February 25, 2022.

This MD&A has been prepared by reference to the disclosure requirements established under National Instrument 51-102 “Continuous Disclosure Obligations” of the Canadian Securities Administrators. Additional information on the Company, including its 2021 Annual Information Form, is available on SEDAR's website at www.sedar.com or on the Company's website at www.algonet.com .

Business Profile

Algoma Central Corporation owns and operates the largest fleet of dry and liquid bulk carriers operating on the Great Lakes - St. Lawrence Waterway, including self-unloading dry-bulk carriers, gearless dry-bulk carriers and product tankers. Algoma also owns ocean-going self-unloading dry-bulk vessels operating in international markets and a 50% interest in several global joint ventures, which include a diversified portfolio of dry-bulk fleets operating internationally. In addition to its owned vessels, the Company provides operational management for four vessels; one owned by G3 Canada Limited and three by NovaAlgoma Cement Carriers ("NACC"), a related party.

The Company reports the results of its operations for six business units or segments. The largest is the Domestic Dry-Bulk segment, which includes the Company’s 18 Canadian dry-bulk carriers. This segment serves a wide variety of major industrial sectors, including iron and steel producers, aggregate producers, cement and building material producers, salt producers and agricultural product distributors.

The Product Tanker fleet provides safe and reliable transportation of liquid petroleum products throughout the Great Lakes, St. Lawrence Seaway and Atlantic Canada regions. This business unit consists of seven double-hull product tankers employed in Canadian flag service. Domestic customers include major oil refiners, leading wholesale distributors, and large consumers of petroleum products.

The Company’s international Ocean Self-Unloaders segment consists of eight ocean-going self-unloading vessels and a 50% interest in a ninth selfunloader. The eight self-unloaders are part of the world's largest pool of ocean-going self-unloaders, which at the end of 2021 totalled 18 vessels.

The Global Short Sea Shipping segment, which consists of the Company's NovaAlgoma joint ventures, focuses on niche marine transportation markets featuring specialized equipment or services. The cement carrier fleet comprises pneumatic cement carriers servicing large global cement manufacturers that support infrastructure projects. The short sea mini-bulker fleet comprises owned ships, chartered vessels, and vessels operated under third party management contracts. The fleet supports the agricultural, cement, construction, energy and steel industries worldwide. The handy-size fleet is an opportunistic sales and purchase vessel platform.

The Investment Properties segment consists of a shopping centre located in Sault Ste. Marie, Ontario.

The Corporate segment consists of the Company's head office expenditures, third party management services and other administrative functions of the Company.

Impact of Seasonality on the Company

The nature of the Company's business is such that the earnings in the first quarter of each year are not indicative of the results for the other three quarters in the year. Due to the closing of the canal system and the winter weather conditions on the Great Lakes - St. Lawrence Waterway, the majority of the Domestic Dry-Bulk fleet does not operate for most of the first quarter. In addition, significant repair and maintenance costs are incurred in the first quarter to prepare the Domestic Dry-Bulk fleet for the upcoming navigation season. As a result, first quarter revenues and earnings are significantly lower than those of the remaining quarters in the year.

Important Information About This MD&A

The reporting currency used is the Canadian dollar and all amounts are reported in thousands of Canadian dollars, except for per share data, and unless otherwise noted.

Forward-Looking Statements

Algoma Central Corporation’s public communications often include written or oral forward-looking statements. Statements of this type are included in this document and may be included in other filings with Canadian securities regulators or in other communications. All such statements are made pursuant to the safe harbour provisions of any applicable Canadian securities legislation. Forward-looking statements may involve, but are not limited to, comments with respect to our objectives and priorities for 2022 and beyond, our strategies or future actions, our targets, expectations for our financial condition or share price and the results of or outlook for our operations or for the Canadian, U.S. and global economies. The words "may", "will", "would", "should", "could", "expects", "plans", "intends", "trends", "indications", "anticipates", "believes", "estimates", "predicts", "likely" or "potential" or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements.

By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that our assumptions may not be correct and that actual results may differ materially from such predictions, forecasts, conclusions or projections. We caution readers of this document not to place undue reliance on our forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements.

The future outcomes that relate to forward-looking statements may be influenced by many factors, including but not limited to:

• the impact of climate change on markets served by our customers, including the impact of drought conditions on agricultural outputs and the impact of winter conditions on production and/or sale of certain commodities;

• the economic impact of COVID-19 in Canada, the U.S., and other global markets;

• general economic and market conditions in the countries in which we operate;

1 I ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS

• our success in securing contract renewals and maintaining existing freight rates with existing customers;

• • our success in securing contracts with new customers at acceptable freight rates;

• evolving regulations focused on carbon emissions and ballast water treatment that could require capital investments and increase costs that may not be recoverable from revenues;

• our ability to attract and retain qualified employees;

• interest rate and currency value fluctuations;

• our ability to execute our strategic plans and to complete and integrate acquisitions;

• critical accounting estimates;

• operational and infrastructure risks, including on-going maintenance and operational reliability of the St. Lawrence Seaway and Welland Canal;

• • on-time and on-budget delivery of new ships from shipbuilders;

• general political conditions;

• labour relations with our unionized workforce;

• the possible effects on our business of war or terrorist activities;

• disruptions to public infrastructure, such as transportation, communications, power or water supply, including water levels;

• • technological changes;

• significant competition in the shipping industry and from other transportation providers;

• reliance on partnering relationships;

• appropriate maintenance and repair of our existing fleet by third-party contractors;

• health and safety regulations that affect our operations can change and be onerous and the risk of safety incidents can affect results;

• a change in applicable laws and regulations, including environmental regulations, could materially affect our results;

• economic conditions may prevent us from realizing sufficient investment returns to fund our defined benefit plans at the required levels;

• • our ability to raise new equity and debt financing if required;

• general weather conditions or natural disasters;

• the seasonal nature of our business; and

• risks associated with the lease and ownership of real estate.

This should not be considered a complete list of all risks to which the Company may be subject from time to time. When relying on forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider these factors, as well as other uncertainties and potential events and the inherent uncertainty of forward-looking statements.

The Company does not undertake to update any forward-looking statements, whether written or oral, that may be made, from time to time, by the organization or on its behalf, except as required by law. The forward-looking information contained in this document is presented for the purpose of assisting our shareholders in understanding our financial position as at and for the periods ended on the dates presented and our strategic priorities and objectives and may not be appropriate for other purposes.

For more information, please see the discussion of risks in the Company’s Annual Information Form for the year ended December 31, 2021, which outlines in detail certain key factors that may affect the Company’s future results. The Annual Information Form can be found on the Company's website at www.algonet.com and on SEDAR's website at www.sedar.com.

Ocean Self-Unloaders

Algoma participates in the world's largest pool of ocean-going self-unloaders (the "Pool"). The Pool’s commercial results reflect a pro-rata share of Pool revenue and voyage costs (in operating expenses) for the Company's eight 100% owned ships. The costs incurred to operate these ships are recorded in operating expenses. Earnings from partially owned ships operating in this sector are included in the Company's joint venture, Marbulk. Algoma does not incur selling expenses on ocean self-unloader business, but instead pays a commercial fee to the Pool manager, which is reflected as an operating expense.

Global Short Sea Shipping

Revenue from the Global Short Sea segment, in which we participate via joint ventures, is not included in the consolidated revenue figure. The Company's 50% share of net earnings, adjusted for amortization arising from vessel purchase price allocation and intangibles, is included in net earnings of joint ventures in our consolidated earnings.

Impact of Current Economic Uncertainty

Since COVID-19 first appeared in our markets in early 2020, causing a swift and severe economic retraction, the global economy has staged a remarkable turn-around. The broad availability of vaccines in 2021 enabled many of our markets to return to more or less normal levels; however, the continued unpredictability of the future path of the pandemic, including but not limited to the efforts by governments in the markets that we serve to limit community spread, has resulted in uncertainty for the outlook on 2022. The six key sectors of the economy that we serve have been impacted differently to date by the pandemic and are experiencing different rates of recovery. We expect that this will continue to be the case.

The duration of the pandemic and its overall effect on the economy in the longer term remain uncertain and concerns have recently turned to the potential inflationary impacts of economic policies enacted to address the pandemic, which impact operating costs incurred by the Company.

Non-GAAP Measures

This MD&A uses several financial measures to assess its performance including earnings before interest, income taxes, depreciation, and amortization (EBITDA), free cash flow, return on equity, and adjusted performance measures. Some of these measures are not calculated in accordance with Generally Accepted Accounting Principles (GAAP), which are based on International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), are not defined by GAAP, and do not have standardized meanings that would ensure consistency and comparability among companies using these measures. From Management’s perspective, these non-GAAP measures are useful measures of performance as they provide readers with a better understanding of how management assesses performance. The non-GAAP measures that are used throughout this report are defined below and can also be referred to in the sections entitled EBITDA , Free Cash Flow , Select financial and operational performance and Adjusted performance measures .

ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS I 2

EBITDA

EBITDA is not intended to represent cash flow from operations, and it should not be considered as an alternative to net earnings, cash flow from operations, or any other measure of performance prescribed by IFRS. Management considers EBITDA to be a meaningful measure to assess its operating performance in addition to other IFRS measures. It is included because Management believes it can be useful in measuring its ability to service debt, fund capital expenditures, expand its business and the metric that it is based on is used by credit providers in the financial covenants of the Company's senior secured long-term debt.

Free Cash Flow

Management believes that free cash flow is a useful measure of liquidity as it demonstrates the Company's ability to generate cash for debt obligations and for discretionary uses such as payments of dividends, investing activities and additions of property, plant, and equipment. The Company defines its free cash flow as cash from operating activities less debt service and capital required for maintenance of existing assets.

Return on Equity

Return on equity is a profitability measure that presents the net earnings as a percent of average shareholders' equity.

Adjusted Performance Measures

Management assesses results on a reported and adjusted basis and considers both as useful measures of performance. Adjusted results remove items of note from reported results and are used to calculate the adjusted measures. Items of note include certain items of significance that arise from time-totime which management believes are not reflective of underlying business performance. Management believes that adjusted measures provide the reader with a better understanding of how we assess underlying business performance and facilitate a more informed analysis of trends.

3 I ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS

Select Financial and Operational Highlights

Financial Highlights

Financial Highlights
For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Reported revenue Freight revenues (1) Operating earnings Net earnings Basic earnings per share Diluted earnings per share EBITDA (2) Free Cash Flow (3) Dividends declared per share (4) Return on Equity(ROE) (5) As at December 31 Common shares outstanding Total assets Total long-term financial liabilities	$ 598,873 $ 545,660 $ 567,908 $ 53,213 $ (22,248) 721,450 658,254 647,063 63,196 11,191 93,307 74,086 58,370 19,221 15,716 82,170 45,850 24,159 36,320 21,691 2.17 1.21 0.63 0.96 0.58 2.01 1.19 0.63 0.82 0.56 188,983 174,063 150,520 14,920 23,543 134,378 104,496 93,186 29,882 11,310 0.68 3.15 1.16 (2.47) 1.99 13.7 % 7.5 % 3.6 % 6.2pp 3.9pp 37,800,943 37,800,943 37,824,543 — (23,600) 1,200,083 1,223,096 1,147,377 (23,013) 75,719 $ 391,682 $ 390,633 $ 254,777 $ (1,049) $ (135,856)

• (1) Freight revenues includes our 50% share of freight revenue from the Global Short Sea Shipping segment.

• (2) See the section entitled Important Information About This MD&A - EBITDA for an explanation of this non-GAAP measure.

• (3) See the section entitled Financial Condition, Liquidity and Capital Resources - Cash Flows for an explanation of this non-GAAP measure.

• (4) There were special dividends declared of $0.75 in 2019 and $2.65 in 2020. Not including the special dividends, dividends declared in 2019 were $0.41 and $0.50 in 2020.

• (5) Return on equity is a profitability measure that presents the net earnings as a percent of average shareholders' equity.

2021 Highlights

Demand in many commodity groups steadily returned to pre-pandemic levels during the year. Demand recovery was most notably seen in our mini-bulker fleet within our Global Short Sea Shipping Segment, which was hit hard by the economic fallout from COVID-19 in 2020. Iron and steel, construction and salt drove higher returns in our Domestic Dry-Bulk segment and although volumes in the Ocean Self-Unloaders segment are not recovering as quickly as anticipated, demand for gypsum, and fewer dry-dockings resulted in increased vessel on-hire time. The improvement in the global economy has also resulted in an increase in fuel prices which has consequently driven a significant rise in fuel cost recovery charges this year. Rising fuel prices impact revenues and are largely passed through to customers, mitigating any impact of this source of inflation on our earnings.

Fleet Renewal

During 2021, we took delivery of the Captain Henry Jackman, the fifth Equinox Class gearless dry-bulk carrier and the tenth Equinox Class vessel to join the fleet. The vessel began trading on the Great Lakes in late June and has been a valued addition to the fleet; the vessel's efficiency improvements are evidence of our dedication to continually finding ways to minimize our environmental footprint, maximize operational efficiency, and provide excellent services to meet our customers' needs. Our fleet renewal program continues to move forward with an order placed for our eleventh Equinox Class vessel, which is to be constructed in China and is scheduled to join the fleet in 2024.

Financial Highlights - 2021 compared to 2020

• Reported revenue increased $53,213 or 10%, to $598,873.

• Operating earnings increased $19,221 or 26% to $93,307 and net earnings increased $36,320 or 79% to 82,170.

• Basic earnings per share were $2.17 compared to $1.21 and diluted earnings per share were $2.01 compared to $1.19.

• ROE increased 620 basis points to 13.7%.

• Book value per share as at December 31, 2021 and 2020 was $16.94 and $14.83.

ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS I 4

Operational Highlights

The following table lists key measures of the Company's operating performance, for the purpose of measuring the efficiency and effectiveness of our operations. The operational highlights below relate only to our Domestic Dry-Bulk and Product Tanker segments.

For theyears ended December 31	2021	2020	2019
Total cargo carried(metric tonne) (1)	22,432,947	22,260,824	22,451,357
Tonne-kilometre travelled (2)	25,695,112,040	24,298,706,812	25,865,590,772
Vessel utilization (3)
Domestic Dry-Bulk	95 %	90 %	107 %
Product Tankers	82 %	90 %	100 %

(1) Total quantity of cargo in metric tonnes transported during the period.

(2) Total cargo tonne-kilometres travelled in the period. Calculated as cargo quantity multiplied by the distance in kilometres that the cargo quantity was transported.

(3) Total number of days that vessels operated expressed as a percentage of the total number of days that were available for vessels to operate based on a standard operating season. The standard season for Domestic Dry-Bulk excludes days on which the Welland Canal is closed.

EBITDA

The Company uses EBITDA as a measure of the cash generating capacity of its businesses. The following table provides a reconciliation of net earnings in accordance with GAAP, to the non-GAAP EBITDA measure for the years ended December 31, 2021, 2020 and 2019, and presented herein:

For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Net earnings Adjustments to net earnings: Depreciation and amortization Other operating items Interest expense, net Loss (gain) on disposal of assets Gain on sale of property Foreign currency (gain) loss Income tax expense Joint ventures Interest expense Foreign exchange (gain) loss Depreciation and amortization Impairment Income tax expense (recovery) Gain on disposal of vessels	$ 82,170$ 45,850 $ 24,159 $ 36,320 $ 21,691 67,852 75,154 70,015 (7,302) 5,139 (3,379) — — (3,379) — 20,652 19,500 18,693 1,152 807 — 65 (2,491) (65) 2,556 (1,596) (5,621) — 4,025 (5,621) (1,326) (351) 886 (975) (1,237) 11,812 9,503 5,109 2,309 4,394 1,930 3,575 6,167 (1,645) (2,592) (165) (183) 884 18 (1,067) 15,389 16,844 15,608 (1,455) 1,236 — 9,746 15,970 (9,746) (6,224) 616 296 (64) 320 360 (4,972) (315) (4,416) (4,657) 4,101
EBITDA (1)	$ 188,983$ 174,063 $ 150,520 $ 14,920 $ 23,543

(1) Please refer to the section entitled Important Information About This MD&A for an explanation of this non-GAAP measure.

5 I ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS

Revenues

Revenues
For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Reported Revenue	$ 598,873$ 545,660 $ 567,908 $ 53,213 $ (22,248)
Freight revenues (1) Other revenues	$ 721,450$ 658,254 $ 647,063 $ 63,196 $ 11,191 9,383 11,122 12,891 (1,739) (1,769)
Total revenues	$ 730,833$ 669,376 $ 659,954 $ 61,457 $ 9,422
Freight revenues Domestic Dry-Bulk Product Tankers Ocean Self-Unloaders Global Short Sea Shipping (1)	$ 338,644$ 285,931 $ 281,587 $ 52,713 $ 4,344 94,535 114,273 106,271 (19,738) 8,002 156,294 134,109 61,072 22,185 73,037 131,977 123,941 127,780 8,036 (3,839)
Totalfreight revenues	$ 721,450$ 658,254 $ 576,710 $ 63,196 $ 81,544

Freight revenues include our 50% share of freight revenue from the Global Short Sea Shipping segment. The Investment Properties and Corporate segments do not (1) generate freight revenue.

Freight revenues for the year were higher when compared to 2020 driven primarily by strong market rates across most commodity groups. Economic recovery is underway in Canadian and international markets and most segments were able to take advantage of higher demand and strong freight rates.

• Freight markets in the Domestic Dry-Bulk segment were generally robust in 2021, driving a slight increase to overall volumes and increased revenue days. Despite a decrease in grain volumes this year, higher volumes in the iron and steel and salt sectors more than offset the reduced demand for grain products.

• The continuation of travel restrictions and global stay-at-home orders continued to impact demand for petroleum products in 2021 and the Product Tanker segment did not experience a repeat of the significant cargo requirements in 2020 that were driven by movement of products from Great Lakes refineries to the East Coast.

• Volumes in the Ocean Self-Unloader segment were primarily impacted in 2021 by reduced demand for aggregates as infrastructure projects in the U.S. have not yet returned to pre COVID-19 levels. Strength in U.S. construction is positively impacting the gypsum market and the sector is seeing steady demand. Revenue improvements year-over-year were driven primarily by more on-hire days, reflecting fewer dry-dockings in the fleet in 2021.

• This year, higher demand and tight vessel capacity drove freight rates up in the mini-bulker segment and the demand in the cement market continues to stay strong.

2022 Business Outlook

For 2022, we are expecting the demand for manufacturing and building materials to continue to trend upwards, and steady production and associated demand should result in salt volumes approximating normal levels. The impact of the drought in Western Canada will be a significant factor in our domestic trade but we are preparing for lower volumes with plans for strategic capacity deployment and maintaining tight control of operating costs.

The demand for petroleum products in 2022 is expected to be similar to 2021 as our customers continue to recover from the impact COVID-19 has had on the demand for wholesale petroleum products. We are ready to deploy additional capacity should restrictions ease and global travel begin to recover.

Market trends remain positive in our international segments as we begin 2022 and we are hopeful there will be a return to more normal aggregate volumes following the recent downturn in global infrastructure projects. Freight rates in our Ocean Self-Unloader segment and in our Global Short Sea joint ventures are likely to remain strong as market demand continues to steadily increase after COVID-19 related downturns.

ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS I 6

Stock Market Highlights

Common Shares

The common shares of the Company are listed on The Toronto Stock Exchange under the symbol of ALC. The price ranges and volume of common shares of the Company traded on the TSX on a monthly basis for 2021 were as follows:

Month	High	Low	Number of Trades	Volume Traded (000’s)	Value Traded (000’s)
January	$14.52	$13.26	1,947	557,121	7,876
February	$15.75	$13.51	833	152,667	2,282
March	$17.54	$14.82	1,421	290,106	4,798
April	$17.50	$16.58	1,106	206,189	3,511
May	$17.51	$16.37	726	156,468	2,664
June	$17.19	$16.33	525	100,359	1,670
July	$16.79	$15.08	761	157,133	2,496
August	$17.59	$15.45	888	189,846	3,125
September	$18.93	$16.62	807	148,925	2,586
October	$18.27	$16.14	662	117,098	2,029
November	$17.80	$16.50	704	124,440	2,138
December	$17.30	$16.38	532	107,887	1,830

Convertible Debentures

The subordinated convertible debentures of the Company are listed on the Toronto Stock Exchange under the symbol of ALC.DB.A. The price ranges and volume of the convertible debentures of the Company traded on the TSX on a monthly basis for 2021 were as follows:

Month	High	Low	Number of Trades	Volume Traded (000’s)	Value Traded (000’s)
January	$106.00	$103.00	93	6	581.46
February	$105.86	$103.20	35	5,470	572.98
March	$112.72	$104.00	135	69,050	7,479.52
April	$113.55	$109.00	92	24,150	2,688.60
May	$112.17	$109.00	64	5,320	592.28
June	$112.00	$108.16	37	2,530	277.75
July	$111.06	$103.06	45	5,090	539.04
August	$112.00	$106.77	53	25,120	2,717.47
September	$117.25	$109.39	43	4,490	500.38
October	$113.25	$107.77	52	4,760	528.88
November	$112.00	$109.00	45	4,770	526.10
December	$111.00	$107.43	52	3,660	398.05
The current conversionprice of the convertible debentures has been set at $16.11 effective August 18, 2021.

7 I ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS

Adjusted Performance Measures

Management assesses results on a reported and adjusted basis and considers both as useful measures of performance. Adjusted results remove items of note from reported results and are used to calculate the adjusted measures noted below. Items of note include certain items of significance that arise from time to time which management believes are not reflective of underlying business performance. We believe that adjusted measures provide the reader with a better understanding of how management assesses underlying business performance and facilitates a more informed analysis of trends. Adjusted net earnings below is net of income tax. These measures do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies.

The following table provides a reconciliation of net earnings, return on equity and basic and diluted earnings per share in accordance with GAAP, as reported for the years ended December 31, 2021, 2020 and 2019, to the adjusted non-GAAP performance measures presented herein:

For theyears ended December 31		2021		2020		2019
Net earnings	$	82,170	$	45,850	$	24,159
Adjustments:
Impairment (reversal)		(210)		9,789		15,970
Gain on sale of investmentproperty		—		(4,131)		—
Adjusted net earnings	$	81,960	$	51,508	$	40,129
Return on equity		13.68 %		7.51 %		3.55 %
Adjusted return on equity (1)		13.65 %		8.43 %		5.89 %
Basic earnings per share	$	2.17	$	1.21	$	0.63
Impact of adjustmentsper share		(0.01)		0.15		0.42
Adjusted basic earnings per share	$	2.16	$	1.36	$	1.05
Diluted earnings per share	$	2.01	$	1.19	$	0.63
Impact of adjustmentsper share		(0.01)		0.15		0.42
Adjusted diluted earnings per share	$	2.00	$	1.34	$	1.05

• (1) Adjusted return on equity is calculated by dividing adjusted net earnings by unadjusted shareholders' equity.

• In the third quarter of 2021 a small bunkering vessel that had been laid up at the end of 2020 was sold and a $286 gain resulting from the sale was recorded as an impairment reversal.

• In the fourth quarter of 2020, an apartment building investment property was sold and a gain of $5,621 was recorded.

• In the third quarter of 2020, Marbulk management determined that the carrying value of a vessel that was returned by its charterer earlier in the year should be written down to its scrap value and an impairment provision of $9,746 was recorded, which is reflected in equity earnings from joint ventures.

• In the fourth quarter of 2019, the Company determined that the carrying value of its investment in NASC was impaired and recognized an impairment loss of $15,542 in net earnings from investments in joint ventures.

The following table provides a reconciliation of operating earnings in accordance with GAAP, as reported for the years ended December 31, 2021, 2020 and 2019, to the adjusted non-GAAP performance measures presented herein:

For theyears ended December 31		2021		2020		2019
Revenue	$	598,873	$	545,660	$	567,908
Operating earnings	$	93,307	$	74,086	$	58,370
Adjustments:
Impairment reversal		(286)		—		—
Adjusted operating earnings	$	93,021	$	74,086	$	58,370
Profit margin		15.58 %		13.58 %		10.28 %
Impact of adjustments onprofit margin		(0.05) %		— %		— %
Adjustedprofit margin		15.53 %		13.58 %		10.28 %

ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS I 8

Domestic Dry-Bulk Segment

Financial Performance

Financial Performance
For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Revenue Operating expenses Selling, general and administrative Other operating items Depreciation and amortization	$ 338,661$ 286,156 $ 281,680 $ 52,505 $ 4,476 (238,423) (200,788) (212,844) (37,635) 12,056 (11,660) (11,522) (11,289) (138) (233) 3,093 — — 3,093 — (26,701) (27,094) (24,112) 393 (2,982)
Operating earnings Gain on sale of property Income tax expense	64,970 46,752 33,435 18,218 13,317 1,596 — — 1,596 — (17,305) (12,244) (9,238) (5,061) (3,006)
Net earnings	$ 49,261$ 34,508 $ 24,197 $ 14,753 $ 10,311

Operational Performance

For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Volumes(metric tonnes) Iron and steel Construction Agriculture Salt Other	8,354 7,682 9,422 672 (1,740) 3,239 3,255 3,840 (16) (585) 3,425 3,804 3,093 (379) 711 5,433 5,285 3,830 148 1,455 — — 87 — (87)
Total volumes	20,451 20,026 20,272 425 (246)
Revenue Days Operating Days	4,856 4,708 4,907 148 (199) 5,021 4,879 5,142 142 (263)

EBITDA

The following table provides a reconciliation of net earnings in accordance with GAAP to the non-GAAP EBITDA measure, as reported for the years ended December 31, 2021, 2020 and 2019, and presented herein:

For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Net earnings Adjustments to net earnings: Depreciation and amortization Income tax expense Other operating items Loss (gain) on disposal of assets Gain on sale ofproperty	$ 49,261$ 34,508 $ 24,197 $ 14,753 $ 10,311 26,701 27,094 24,112 (393) 2,982 17,305 12,244 9,238 5,061 3,006 (3,093) — — (3,093) — — 65 (2,491) (65) 2,556 (1,596) — — (1,596) —
EBITDA (1)	$ 88,578$ 73,911 $ 55,056 $ 14,667 $ 18,855

(1) Please refer to the section entitled Important Information About This MD&A for an explanation of this non-GAAP measure.

9 I ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS

2021 Overview

The increase in revenue in the Domestic Dry-Bulk segment was mainly due to significantly improved freight rates realized in a number of sectors. Freight markets were generally robust in 2021, driving a 2% increase in overall volumes and a 3% increase in revenue days.

Despite lower volumes in agriculture this year compared to the significant surge in grain volumes experienced in 2020, increased iron and steel and salt volumes more than offset the reduced demand for grain and contributed to the increase in fleet utilization. In addition, the improvement in the global economy resulted in an increase in fuel prices, which in turn has driven a significant rise in fuel cost recovery charges for the year; average fuel prices having increased by 67% when compared to 2020 prices. The increase in fuel prices also affects operating costs; however, fuel costs are passed on to customers through the fuel component of freight rates and as a result, our earnings are largely sheltered from the impact of changes in the cost of this input.

Higher operating costs were mainly due to the increases in fuel prices and a 3% increase in operating days. Direct expenses, specifically crew and supply costs, were driven higher primarily by the increase in operating days. The increase in crew costs was also slightly impacted by investments made in crew training this year. The increase in operating costs was partially offset by an insurance settlement related to a 2020 vessel grounding that also resulted in the disposal of the affected vessel in the third quarter of 2021.

Overall, volumes reflect a 9% increase in iron and steel shipments and a 3% increase in salt volumes. Improvements in the export ore business and the steady recovery of North American steel demand following COVID-19 related production downturns were the driving forces behind the increase. Partially offsetting the increase was a 10% decrease in agriculture volumes; 2020 experienced an unexpected surge in grain demand, which was generally attributed to global stay-at-home orders.

Higher freight rates were driven by higher demand in certain trades and lack of excess vessel capacity. Rates in the export ore sector were a large contributor to the increase in freight revenue, driven by global demand for iron ore and high steel prices. Commodities that are part of the cement manufacturing process such as pet coke, are positively impacting freight rates in this sector as demand for building materials increases. Salt demand is holding steady and the sector is experiencing positive rate increases as a result. Demand for grain this year returned to more normal levels, as reflected in the decrease in volumes for this sector.

Following a vessel grounding incident in late December 2020, it was determined that the nature and extent of the repairs required to bring the vessel back into service were too great to warrant repairing the vessel. The Company reached a settlement agreement with its insurance company in 2021 and the vessel was sold for recycling. The Company recorded a $3,093 net gain under other operating items resulting from the insurance settlement and the disposal of the vessel. The $1,596 gain on sale of property relates to the sale of a building belonging to Algoma Ship Repair.

2022 Outlook

The impact of the drought in Western Canada will be a significant factor in 2022. We currently expect reduced grain volumes, at least until the 2022 harvest begins shipping in the fall. Reduced grain volumes will impact some of our trade routes in the spring and summer. We are expecting the demand for manufacturing and building materials to continue to trend upwards, and steady production levels from our major salt customer should result in strong salt volumes. We are preparing for lower early-season grain volumes with plans for strategic capacity deployment and maintaining tight control over operating costs.

Our fleet renewal program continues and we expect good progress on our eleventh Equinox vessel, which is to be constructed in China and is scheduled to join the fleet in 2024. Construction of the vessel is set to begin in late 2022. These new vessels are part of an improved Equinox Class design that can carry more cargo without requiring an increase in the vessel's power and fuel consumption.

ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS I 10

Product Tankers Segment

Financial Performance

Financial Performance
					Favourable/(Unfavourable)
For theyears ended December 31		2021	2020	2019	2021 vs. 2020	2020 vs. 2019
Revenue	$	94,535$	114,273 $	141,912 $	(19,738) $	(27,639)
Operating expenses		(63,557)	(73,198)	(104,439)	9,641	31,241
Selling, general and administrative		(4,178)	(4,951)	(4,019)	773	(932)
Other operating items		286	—	—	286	—
Depreciation and amortization		(13,348)	(14,574)	(13,555)	1,226	(1,019)
Operating earnings		13,738	21,550	19,899	(7,812)	1,651
Income tax expense		(3,797)	(5,814)	(5,273)	2,017	(541)
Net earnings	$	9,941$	15,736 $	14,626 $	(5,795) $	1,110

Operational Performance

Operational Performance
For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Volume(metric tonnes) Petroleumproducts	1,981 2,235 2,179 (254) 56
Total volumes	1,981 2,235 2,179 (254) 56
Revenue days(owned fleet) Operating days(owned fleet) Outside charter days	1,998 2,562 2,652 (564) (90) 2,087 2,632 2,810 (545) (178) — 132 667 (132) (535)

EBITDA

The following table provides a reconciliation of net earnings in accordance with GAAP to the non-GAAP EBITDA measure, as reported for the years ended December 31, 2021, 2020 and 2019, and presented herein:

December 31, 2021, 2020 and 2019, and presented herein:
For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Net earnings Adjustments to net earnings: Depreciation and amortization Income tax expense Other operatingitems	$ 9,941$ 15,736 $ 14,626 $ (5,795) $ 1,110 13,348 14,574 13,555 (1,226) 1,019 3,797 5,814 5,273 (2,017) 541 (286) — — (286) —
EBITDA (1)	$ 26,800$ 36,124 $ 33,454 $ (9,324) $ 2,670

(1) Please refer to the section entitled Important information about this MD&A for an explanation of this non-GAAP measure.

11 I ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS

2021 Overview

The decrease in revenue was attributable to reductions in demand from our major customer and consequently a 22% decrease in revenue days compared to 2020. During the prior year, fleet utilization unexpectedly benefited from a significant number of cargoes delivered from Great Lakes refineries to the East Coast. The continuation of travel restrictions and global stay-at-home orders continued to impact demand for petroleum products but did not result in the same volume of East Coast cargoes in 2021.

Higher fuel recovery charges driven by the increases in fuel prices did offset some of the revenue impact from the lower utilization; however, passed through fuel costs do not add to earnings for the segment. Additionally, as a result of the lower demand, we did not require the use of any outside charters, as was the case in 2020. The decrease in outside charter revenue also has a minor impact on earnings, as the cost we incur to charter the capacity is passed through to our customers.

Operating costs were lower this year mainly due to a 21% decrease in operating days driven by the reduced customer demand and vessel utilization. We also incurred lower dry-dock costs this year. Partially offsetting the decrease in expenses was increased fuel costs driven by higher fuel prices.

During the third quarter of 2021, a multi-year contract renewal was successfully completed with our major customer. Additionally, we sold our small bunkering vessel, recording a $286 gain resulting from the sale as an impairment reversal.

2022 Outlook

We expect Product Tanker utilization in 2022 to be similar to 2021 as our customers continue to recover from the impact that COVID-19 has had on the demand for wholesale petroleum products. As a result of the recent contract renewal with our primary Tanker customer, we are anticipating a solid base of consistent vessel utilization in 2022 and are ready to deploy additional capacity if customer requirements change.

ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS I 12

Ocean Self-Unloaders Segment

Financial Performance

Financial Performance
For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Annualforeign exchange rate average	$ 1.2537$ 1.3412 $ 1.3268 $ (0.0875) $ 0.0144
Revenue Operating expenses Selling, general and administrative Other operating items Depreciation and amortization	$ 156,294$ 134,109 $ 131,425 $ 22,185 $ 2,684 (94,619) (84,615) (82,959) (10,004) (1,656) (1,195) (910) (1,136) (285) 226 (5,575) — — (5,575) — (25,402) (29,793) (28,657) 4,391 (1,136)
Operating earnings Net loss from investments injoint ventures	29,503 18,791 18,673 10,712 118 (52) (10,213) (777) 10,161 (9,436)
_Net earnings _	$ 29,451$ 8,578 $ 17,896 $ 20,873 $ (9,318)

Operational Performance

For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Pool Volumes(metric tonnes) (1) Gypsum Aggregates Coal Other	3,619 3,364 3,395 255 (31) 9,007 10,727 14,166 (1,720) (3,439) 7,805 7,230 7,593 575 (363) 858 531 463 327 68
Total volumes	21,289 21,852 25,617 (563) (3,765)
Revenue days Operating days Off-hire days for dry-docking	2,794 2,618 2,254 176 364 2,814 2,639 2,287 175 352 112 297 193 185 (104)

(1) Pool volumes exclude volumes carried on vessels that were under time charter arrangements in 2020 and 2021.

EBITDA

The following table provides a reconciliation of net earnings in accordance with GAAP to the non-GAAP EBITDA measure, as reported for the years ended December 31, 2021, 2020 and 2019, and presented herein:

For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Net earnings Adjustments to net earnings: Depreciation and amortization Joint Venture: Depreciation and amortization Interest expense Income tax expense (recovery) Impairment provision Foreign exchange loss	$ 29,451$ 8,578 $ 17,896 $ 20,873 $ (9,318) 25,402 29,793 28,657 (4,391) 1,136 708 1,563 2,215 (855) (652) — 138 625 (138) (487) 61 208 (9) (147) 217 — 9,746 428 (9,746) 9,318 — 68 696 (68) (628)
EBITDA (1)	55,622 50,094 50,508 5,528 (414)

(1) Please refer to the section entitled Important Information About This MD&A for an explanation of this non-GAAP measure.

13 I ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS

2021 Overview

Revenue was higher in 2021 driven by a 7% increase in revenue days mainly due to fewer dry-dockings compared to 2020 when five vessels were drydocked compared to one this year. Additionally, our pro-rata share of the Pool was higher than normal this year due to unanticipated delivery delays experienced by our Pool partner on replacement vessels. This offset the impact of a 3% decrease in overall Pool volumes.

Overall pool volumes have not recovered as quickly as hoped, particularly in the case of construction materials. Volumes were primarily impacted in 2021 by a 10% decrease in aggregate volumes as infrastructure projects in the U.S. have not returned to pre COVID-19 levels and port congestion in some markets is causing delivery delays. Despite the weakness in the aggregate sector, strength in U.S. house construction is positively impacting the gypsum market and the sector saw a 23% increase in volumes for the Pool.

Although volumes for the Pool were lower this year, strong freight rates across most sectors partially limited the extent of the decline. Gypsum and coal were the main contributors and both are experiencing a higher rate environment. There continues to be weakness in the aggregate market as a result of the downturn in demand.

Operating costs were higher in 2021, driven by a 7% increase in operating days compared to last year as a result of the higher fleet on-hire rate and increased global fuel prices. The segment benefited from more on-hire days and lower dry-dock expenditures this year compared to 2020 when there were five planned dry-dockings versus one this year.

Other items for the year to date comprises a one-time compensation payment of $5,575 related to the retirement of two older vessels by our Pool partner.

Management determined in the 2020 third quarter that the carrying value of a jointly owned vessel should be written down to its net scrap value and accordingly an impairment provision of $9,789 was recorded and is reflected in equity earnings from joint ventures in that prior year quarter.

2022 Outlook

The outlook for the Ocean Self-Unloader segment for 2022 is for tonnage to grow in all sectors and for generally improving rates across the various markets. Vessel supply at at the Pool level is fairly well balanced, with five Pool vessels undertaking dry-dockings this year, including two Algoma vessels. With the arrival of our partner's two new conversion vessels in the fourth quarter of 2021, the Pool's capacity has returned to normal levels and Algoma's share of Pool earnings will return to normal levels for 2022.

ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS I 14

Global Short Sea Shipping Segment

Financial Results Overview

Financial Results Overview
For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
_Annualforeign exchange rate average _	$ 1.2537$ 1.3412 $ 1.3268 $ (0.0875) $ 0.0144
Revenue Operating expenses Selling, general and administrative Depreciation and amortization	$ 263,953$ 247,881 $ 255,559 $ 16,072 $ (7,678) (195,582) (197,094) (207,751) 1,512 10,657 (6,684) (7,795) (8,730) 1,111 935 (28,186) (29,310) (25,352) 1,124 (3,958)
Operating earnings Gain on sale of vessels Interest expense Foreign exchangegain (loss)	33,501 13,682 13,726 19,819 (44) 9,944 629 8,832 9,315 (8,203) (3,859) (6,873) (11,083) 3,014 4,210 329 502 (376) (173) 878
Earnings before undernoted Income tax (expense) recovery Net earnings of joint ventures Net (loss) earnings attributable to non-controllinginterest	39,915 7,940 11,099 31,975 (3,159) (1,110) (176) 110 (934) (286) 3,810 1,827 2,324 1,983 (497) (4,526) 1,677 1,492 (6,203) 185
Net earnings	$ 38,089$ 11,268 $ 15,025 $ 26,821 $ (3,757)
Company share of net earnings above Impairment of investment in joint ventures Amortization of vesselpurchaseprice allocation and intangibles	$ 19,045$ 5,634 $ 7,513 $ 13,411 $ (1,879) — — (15,542) — 15,542 (588) (626) (717) 38 91
Company share included in net earnings (loss) from investments in joint ventures	$ 18,457$ 5,008 $ (8,746) $ 13,449 $ 13,754

EBITDA

The following table provides a reconciliation of net earnings in accordance with GAAP to the non-GAAP EBITDA measure, as reported for the years ended December 31, 2021, 2020 and 2019, and presented herein:

December 31, 2021, 2020 and 2019, and presented herein:
For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Company share of net earnings (loss) from investments in joint ventures Adjustments to net earnings: Depreciation and amortization Interest expense Income tax expense (recovery) Foreign currency (gain) loss Impairment of investment in joint ventures Gain on disposal of vessels	$ 18,457$ 5,008 $ (8,746) $ 13,449 $ 13,754 14,681 15,281 13,393 (600) 1,888 1,930 3,437 5,542 (1,507) (2,105) 555 88 (55) 467 143 (165) (251) 188 86 (439) — — 15,542 — (15,542) (4,972) (315) (4,416) (4,657) 4,101
Company share of EBITDA (1)	$ 30,486$ 23,248 $ 21,448 $ 7,238 $ 1,800

(1) Please refer to the section entitled Important information about this MD&A for an explanation of this non-GAAP measure.

15 I ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS

2021 Overview

The global short sea segment experienced a year of strong market recovery compared to 2020 and we are seeing record results for this segment as a consequence. Revenue was higher this year mainly driven by significant improvements in freight rates in the mini-bulker segment and steady demand in the North American and Mediterranean cement markets. These increases were partially offset by lower revenues from the handy-size fleet; in 2021 all four vessels owned by the joint venture were sold for a gain. We initially acquired the handy-size vessels in order to participate in the active international sales and purchase market and have since received dividends from the sale of these vessels.

Revenue in the mini-bulker fleet increased 16% in 2021; in 2020 COVID-19 related reductions in customer demand and pressure on charter rates significantly impacted results. This year, higher demand in the market drove freight rates up and the segment was able to strategically deploy excess capacity to take advantage of the surge in business. With the continuation of a strong global cement market as infrastructure projects generally continue to improve in most market areas, revenue in the cement fleet increased 5%. We were able to support cement customer requirements domestically by redeploying one vessel into Canadian trades where two vessels are off-hire for dry-docking.

Operating costs decreased slightly in 2021 mainly driven by the reduction in the handy-size fleet this year from four vessels in 2020 to none by the end of the 2021 third quarter and the reduction of the mini-bulker fleet by two vessels during the year. Partially offsetting the decrease was a 9% increase in operating costs in the cement fleet as a result of higher fuel costs, vessel repositioning costs and adding an additional vessel to the Great Lakes fleet which impacts expenses as costs to operate domestically are generally higher.

The $9,944 gain on the sale of vessels in 2021 primarily relates to the sale of four vessels in the handy-size fleet and two vessels in the mini-bulker fleet. At the end of the year, the segment does not own any handy-sized vessels.

2022 Outlook

A very strong dry-bulk market benefited the mini-bulker fleet in 2021 and while the market has begun the year strongly, we are anticipating that the market will begin to normalize later in 2022. The cement sector is expected to remain steady for the 2022 season and with the additional 25% investment in our Northern European cement joint venture, we are looking forward to having additional vessel capacity to support increasing cement demand.

Subsequent to year-end, the Board of Directors of the Company approved a further investment in certain Global Short Sea Shipping joint ventures to a maximum of $16,000 to assist the joint ventures to acquire two cement vessels and two bulk carriers. Closings for the purchases is expected to occur at various dates in the first half of 2022.

ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS I 16

Investment Properties Segment

Investment Properties Segment
For the years ended December 31 Revenue Operating expenses Selling, general and administrative Depreciation	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
	$ 6,560$ 8,183 $ 9,809 $ (1,623) $ (1,626) (5,504) (7,113) (6,956) 1,609 (157) (1,000) — — (1,000) — (1,078) (2,684) (2,725) 1,606 41
Operating (loss) earnings Gain on sale of investment property Income tax recovery(expense)	(1,022) (1,614) 128 592 (1,742) — 5,621 — (5,621) 5,621 292 (513) 72 805 (585)
_Net (loss) earnings _	$ (730)$ 3,494 $ 200 $ (4,224) $ 3,294

The Company owns a shopping centre located in Sault Ste. Marie, Ontario and owned an apartment building in the city until it was sold late in 2020. The reduction in revenue and operating expenses in 2021 is largely a result of the impact of the COVID-19 pandemic on the shopping centre, which resulted in the mall being shut down for periods of time. During the fourth quarter of 2020, the Company sold the apartment building for gross proceeds of $6,250, and a gain of $5,621.

Corporate Segment

Corporate Segment
For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Revenue Operating expenses Selling, general and administrative Depreciation	$ 2,823$ 2,939 $ 3,082 $ (116) $ (143) (864) (979) (1,042) 115 63 (14,518) (12,344) (14,839) (2,174) 2,495 (1,323) (1,009) (966) (314) (43)
Operating loss Foreign currency gain (loss) Interest expense, net Income tax recovery	(13,882) (11,393) (13,765) (2,489) 2,372 1,326 351 (886) 975 1,237 (20,652) (19,500) (18,693) (1,152) (807) 8,998 9,068 9,330 (70) (262)
Net loss	$ (24,210)$ (21,474) $ (24,014) $ (2,736) $ 2,540

The Corporate segment consists of revenue from management services provided to third parties, head office expenditures and other administrative expenses of the Company. Revenues are also generated from rental income provided by third party tenants in the Company's head office building. Operating expenses include the operating costs of that office building.

17 I ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS

Consolidated

Interest Expense

Interest Expense
For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Interest expense on borrowings Amortization of financing costs Interest on employee future benefits, net Interest capitalized on vessels under construction	$ 18,633$ 18,088 $ 18,838 $ (545) $ 750 1,612 1,429 1,099 (183) (330) 1,444 916 809 (528) (107) (956) (695) (886) 261 (191)
	$ 20,733$ 19,738 $ 19,860 $ (995) $ 122

Foreign Currency Gain (Loss)

Foreign Currency Gain (Loss)
For theyears ended December 31 2021 2020 2019	Favourable/(Unfavourable)
	2021 vs. 2020 2020 vs. 2019
Gain on foreign denominated cash $ 943$ 872 $ 889 $ 71 $ (17) Gain on return of capital from foreign subsidiary 331 — — 331 — Foreign exchange loss on contract cancellation receivable — — (1,775) — 1,775 Gain (loss) on foreign exchange forward contracts 52 (521) — 573 (521)
$ 1,326$ 351 $ (886) $ 975 $ 1,237

Income Taxes

For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Combined federal andprovincial statutoryincome tax rate	26.5 % 26.5 % 26.5 % — % — %
Net earnings before income tax and net earnings (loss) from investments injoint ventures	$ 75,577 $ 60,558 $ 38,791 $ 15,019 $ 21,767
Expected income tax expense Increase (decrease) in expense resulting from: Foreign tax rates different from Canadian statutory rate Effect of items that are non (taxable) deductible Non-recoverable withholding taxes Deferred tax items recognized Adjustments to prior period provision Utilization of capital loss previously unrecognized Other	$ (20,028) $ (16,048) $ (10,280) $ (3,980) $ (5,768) 8,182 5,478 5,439 2,704 39 (9) 557 (418) (566) 975 (471) (520) (448) 49 (72) 73 300 — (227) 300 65 968 557 (903) 411 232 — — 232 — 144 (238) 41 382 (279)
Actual tax expense	$ (11,812) $ (9,503) $ (5,109) $ (16,206) $ 4,394
Effective tax rate excluding net earnings (loss) from investments injoint ventures	15.6 % 15.7 % 13.2 % (.1) % 2.5 %

Earnings from the Company’s foreign subsidiaries are taxed in jurisdictions which have nil income tax rates. The Canadian statutory rate for the Company for both 2021 and 2020 was 26.5%. Any variation in the effective income tax rate from the statutory income tax rate is due mainly to the lower income tax rates applicable to foreign subsidiaries, the effect of taxable and non-taxable items that may or may not be included in earnings and changes to income tax provisions related to prior periods.

Actual tax expense was $2,309 higher in 2021 as a result of an increase in earnings generated in our domestic segments where earnings are taxed.

ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS I 18

Summary of Quarterly Financial Results

	2021 2020 Quarters Quarters
	Fourth Third Second First Fourth Third Second First
Revenues Operating earnings (loss) Net earnings (loss) Basic earnings (loss) per share Diluted earnings (loss) per share Dividendsper share	$ 178,853 $ 174,734 $ 167,687 $ 77,599$ 154,291 $ 155,002 $ 151,270 $ 85,097 37,181 44,638 40,881 (29,393) 31,978 40,542 28,999 (27,433) 32,287 39,984 32,315 (22,416) 29,499 22,235 17,742 (23,626) 0.85 1.06 0.85 (0.59) 0.78 0.59 0.47 (0.62) 0.77 0.96 0.78 (0.59) 0.72 0.55 0.45 (0.62) 0.17 0.17 0.17 0.17 2.78 0.13 0.12 0.12

Revenues generated by the Company during the year are influenced by seasonal weather conditions, general economic conditions, cyclical demand for marine transportation, competition in the transportation sector and the effects of the COVID-19 pandemic beginning in the second quarter of 2020. Operating expenses reflect the impact of customer demand, fuel prices, and repair and labour costs. Fluctuations in the Canadian dollar relative to the U.S. dollar have also affected the conversion of the Company's U.S. dollar-denominated revenues and expenses and resulted in fluctuations in net earnings in the eight quarters presented above.

Contingencies

For information on contingencies, please refer to Note 28 of the Consolidated Financial Statements for the years ending December 31, 2021 and 2020. There have been no significant changes in the items presented since December 31, 2021.

Capital Resources

The Company has cash on hand of $108,942 at December 31, 2021. Available credit facilities along with projected cash from operations for 2022 are expected to be more than sufficient to meet the Company's planned operating and capital requirements and other contractual obligations for the year.

The Company maintains credit facilities that are reviewed periodically to determine if sufficient capital is available to meet current and anticipated needs. The Company's bank credit facility (the "Facility") expires December 10, 2023 and comprises a $75 million Canadian dollar and a $75 million U.S. dollar senior secured revolving bank credit facility provided by a syndicate of four banks. The Facility bears interest at rates that are based on the Company’s ratio of net senior debt, as defined, to earnings before interest, taxes, depreciation and amortization and ranges from 185 to 315 basis points above bankers’ acceptance or LIBOR rates. The Company has granted a general security agreement in favour of the senior secured lenders and has granted specific collateral mortgages covering the majority of its wholly owned vessels. The Company’s real estate assets and certain vessels, including ones that are not wholly owned, are not directly encumbered under this Facility.

The Company is subject to certain covenants under the terms of the Bank Facility and the Notes, including ones with respect to maintaining defined financial ratios and other conditions. As at December 31, 2021, the Company was in compliance with all of its covenants.

Transactions with Related Parties

The Company's ultimate controlling party is The Honourable Henry N. R. Jackman, together with a trust created in 1969 by his father, Henry R. Jackman.

There were no transactions with related parties for the year ended December 31, 2021.

Financial Condition, Liquidity and Capital Resources

Cash Flows

Cash Flows
For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Net cash generated from operating activities Net cash used in investing activities Net cash (used in)generated from financingactivities	$ 162,381$ 157,061 $ 137,758 $ 5,320 $ 19,303 (16,225) (88,060) (154,609) 71,835 66,549 (141,016) 17,190 12,942 (158,206) 4,248
Net change in cash	5,140 86,191 (3,909) (81,051) 90,100
Effects of exchange rate changes on cash held in foreign currencies Cash, beginningofyear	(108) (1,146) (2,765) 1,038 1,619 103,910 18,865 25,539 85,045 (6,674)
Cash, end of year	$ 108,942$ 103,910 $ 18,865 $ 5,032 $ 85,045

Operating Activities

The significant contributor to the higher net cash generated from operating activities in 2021 was an increase in net earnings in the Domestic Dry-Bulk and Ocean Self-Unloader segments, partially offset by lower earnings in the Product Tankers segment.

19 I ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS

Investing Activities

Net cash used in investing activities decreased in 2021; fiscal 2020 included one final delivery payment on one vessel and two progress payments made on an additional vessel whereas in 2021 there was one final delivery payment and one progress payment made. The decrease was also attributable to higher distributions received from joint ventures, a $7,548 insurance proceed payment on the disposal of one vessel and $8,530 proceeds from the sale of property, plant and equipment.

Financing Activities

Net cash used in financing activities increased this year compared to 2020 driven primarily by the special dividend of $97,679 paid in January 2021.

Free Cash Flow

Management believes that free cash flow is a useful measure of liquidity as it demonstrates the Company's ability to generate cash for debt obligations and for discretionary uses such as payments of dividends, investing activities and proceeds or additions of property, plant, and equipment. The Company defines its free cash flow as cash from operating activities less debt service and capital required for maintenance of existing assets. Free cash flow does not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies.

The following table provides a reconciliation of net cash generated from operating activities in accordance with GAAP to the non-GAAP free cash flow, as reported for the years ended December 31, 2021, 2020 and 2019, and presented herein:

For theyears ended December 31	Favourable/(Unfavourable)
	2021 2020 2019 2021 vs. 2020 2020 vs. 2019
Net cashgenerated from operatingactivities	$ 162,381$ 157,061 $ 137,758 $ 5,320 $ 19,303
Net debt service repayments Capital required for maintenance of existingassets	(18,351) (30,342) (18,709) 11,991 (11,633) (9,652) (22,223) (25,863) 12,571 3,640
Free cashflow	$ 134,378$ 104,496 $ 93,186 $ 29,882 $ 11,310

• Higher net debt service repayments in 2020 relates to make-whole interest payments on the debt refinancing

• There was lower capital required for maintenance of existing assets in 2021 as a result of fewer dry-dockings.

Normal Course Issuer Bid

Effective March 19, 2021, the Company renewed its normal course issuer bid (the "2021 NCIB") with the intention to purchase, through the facilities of the TSX, up to 1,890,047 of its Common Shares ("Shares") representing approximately 5% of the 37,800,943 Shares which were issued and outstanding as at the close of business on March 6, 2021 (the “NCIB”).

Subject to prescribed exceptions, the Company is allowed to purchase up to 3,163 Common Shares on the TSX during any trading day, representing approximately 25% of the average daily trading volume of the shares on the TSX for the previous six calendar months, being 12,653 Shares. Any Shares purchased under the 2021 NCIB are cancelled. The Company did not purchase Shares under the 2021 NCIB.

In conjunction with the renewal of the NCIB, Algoma entered into a new automatic share purchase plan (the “ASPP”) with a designated broker to allow for the purchase of its Shares under the NCIB at times when Algoma normally would not be active in the market due to applicable regulatory restrictions or internal trading black-out periods. Before the commencement of any particular internal trading black-out period, Algoma may, but is not required to, instruct its designated broker to make purchases of Shares under the NCIB during the ensuing black-out period in accordance with the terms of the ASPP. Such purchases will be determined by the broker in its sole discretion based on parameters established by Algoma prior to commencement of the applicable black-out period in accordance with the terms of the ASPP and applicable TSX rules. Outside of these black-out periods, Shares will continue to be purchasable by Algoma at its discretion under its NCIB.

The ASPP will commence on the Company’s behalf during any quarterly blackout period of the Company and will terminate on the earliest of the date on which: (a) the maximum annual purchase limit under the NCIB has been reached; (b) Algoma terminates the ASPP in accordance with its terms; or (c) the NCIB expires. The ASPP constitutes an “automatic securities purchase plan” under applicable Canadian securities laws.

The Company intends to renew its normal course issuer bid upon receipt of the required approvals from regulatory authorities.

ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS I 20

Commitments

The table below provides aggregate information about the Company's contractual obligations as at December 31, 2021 that affect the Company's liquidity and capital resource needs.

and capital resource needs.
						2026 and
		2022	2023	2024	2025	Beyond	Total
Long-term debt	$	150 $	5,197 $	81,137 $	— $	314,367 $	400,851
Capital asset commitments		19,396	54,345	—	—	—	73,741
Interest payments on long-term debt		16,536	16,346	14,120	11,955	98,202	157,159
Employee future benefit special payments		1,452	—	—	—	—	1,452
Leases		132	114	116	120	53	535
	$	37,666 $	76,002 $	95,373 $	12,075 $	412,622 $	633,738

Critical Accounting Estimates

The Company's significant accounting policies are described in Note 3 to the Consolidated Financial Statements. Some of these accounting policies require management to make estimates and assumptions about matters that are uncertain at the time the estimates and assumptions are made. Management believes that the estimates are reasonable; however, different estimates could potentially have a material impact on the Company's reported financial position or results of operations.

Employee Future Benefits

The Company provides pensions and post-employment benefits including health care, dental care and life insurance to certain employees. The determination of the obligations and expense for the employee future benefits is dependent on the selection of certain assumptions used by the Company in calculating such amounts. Those assumptions are disclosed in Note 21 to the Company’s Consolidated Financial Statements, the most significant of which are the discount rate, the rate of increase in compensation, expected rates of return on plan assets, the rate of increase in the cost of health care and the estimated average remaining service lives of employees, some of which are defined by regulation. The assumptions are reviewed annually and the impact of any changes in the assumptions is reflected in actuarial gains or losses as disclosed in Note 21 to the Consolidated Financial Statements. The significant accounting assumptions adopted are internally consistent and reflect the long-term nature of employee future benefits. Significant changes in assumptions could materially affect the Company’s reported employee future benefit obligations and future expense.

For 2021, the Company's assumed rate of compensation increases for purposes of calculating the current service cost that is included in the net benefit cost incurred changed to 2.5% in 2021 compared to 3.0% to 2020, 2.5% thereafter.

Property, Plant, Equipment and Impairment

For information on property, plant and equipment please refer to Note 15 of the Consolidated Financial Statements for the years ending December 31, 2021 and 2020. The Company reviews the depreciation periods of property, plant, and equipment on a regular basis for changes in estimated useful lives. The Company also reviews for impairment indicators on a quarterly basis, and at a minimum on an annual basis, whether there are any signs of impairment or a reversal of a previously recognized impairment in accordance with the Company’s accounting policy.

Disclosure Controls and Procedures and Internal Controls over Financial Reporting

Disclosure Controls and Procedures

In accordance with the requirements of National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings, the Company's management, including the Chief Executive Officer and the Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2021. Under the supervision of and with the participation of the Chief Executive Officer and the Chief Financial Officer, management has concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2021.

Internal Controls over Financial Reporting

The Company's management is responsible for designing, establishing and maintaining an adequate system of internal controls over financial reporting. The internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with IFRS. Because of inherent limitations, internal controls over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.

Management has used the criteria established in the 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission to assess, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s internal controls over financial reporting. Based on this assessment, management has concluded that the Company's internal controls over financial reporting are operating effectively as of December 31, 2021.

Changes in Internal Controls over Financial Reporting

During the period ended December 31, 2021, there have been no changes in the Company’s policies and procedures and other processes that comprise its internal control over financial reporting, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

21 I ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS

Derivative Financial Instruments

The Company’s exposure to foreign currency fluctuations is related to its unhedged cash balances and unhedged net investment in foreign subsidiaries. The Company has hedged part of its investment in the subsidiaries and joint ventures against its foreign denominated long-term debt. At December 31, 2021 and 2020, the net investment in U.S. dollar foreign subsidiaries and joint ventures was $328,345 and $330,601 U.S. dollars, respectively. The amount used as a hedge at December 31, 2021 and 2020 was $147,000 U.S. dollars.

The Company has significant commitments due for payment in U.S. dollars. For payments due in U.S. dollars, the Company mitigates the risk principally through U.S. dollar cash inflows and foreign-denominated debt. The Company also utilizes foreign exchange forward contracts as a hedge on purchase commitments to manage its foreign exchange risk associated with payments required under shipbuilding contracts with foreign shipbuilders for vessels that will join our Canadian flag domestic dry-bulk fleet.

At December 31, 2021 the Company had U.S. dollar denominated foreign exchange forward contracts outstanding with a notional principal of $39,420 (2020 - $17,500) and fair value gain of $1,984 (2020 - ($1,296)).

Risks and Uncertainties

The following section describes both general and specific risks that could affect the Company’s financial performance. The risks described below are not the only risks facing the Company. Additional risks and uncertainties that are not currently known or that are currently considered immaterial may also materially and adversely affect the Company’s business operations.

Global Pandemic and Economic Downturn

The occurrence of the COVID-19 pandemic in 2020 was disruptive for the shipping industry. In addition to the impact the pandemic had on the general economy and therefore on demand from our customers, travel restrictions and lock-downs enacted to control the spread of the disease had a significant impact on our ability to effect crew exchanges, particularly for our international ships. In addition, general operating costs rose to include the costs of added safety precautions and supplies required to respond to the risks posed by COVID-19. Although marine transportation was deemed an essential service in most countries, the impacts of a continuation of the current pandemic or a different pandemic in the future could include reduced revenues, higher operating costs, limited access to crew, or difficulties in obtaining necessary supplies or parts on a timely basis.

Availability of Qualified Personnel

The long-term challenge of recruiting and retaining skilled crews in the marine industry continues to be an area of focus. The challenge of recruiting new employees into the marine industry, competition for skilled labour from other sectors, competitors, or other entities operating in the marine industry is a growing challenge. The limited number of cadet berths is also a factor that needs to be addressed by the marine industry as a whole. A lack of properly skilled shipboard employees could lead to service delays and interruptions as the ability of the Company to fully utilize its domestic vessels could be affected. The Company continues to work with industry groups, its unions and educators to develop and enhance training programs to ensure an adequate supply of labour is available to meet its future needs.

Competitive Markets

Marine transportation is competitive in both domestic and international markets. Marine transportation is subject to competition from other forms of transportation such as road and rail freight. Competition may decrease the profitability associated with any particular contract and may increase the cost of acquisitions. The Company strives to differentiate itself from the competition with superior customer service, having vessels suited to each customer’s needs and maintaining a compliant, safe, efficient and reliable fleet.

Changes in general economic conditions or conditions specific to a particular customer may affect the demand for vessel capacity. The Company believes that due to the long-term nature of its service contracts, vessel configurations and geographic diversity, it is well positioned in the market place and is able to withstand fluctuations in market conditions.

The geographic and operational diversity of the Company will help to mitigate negative economic impact to the sectors in which it operates.

Contractual Nature of the Business

The overwhelming majority of the Company's revenues are a result of long-term contracts with large industrial customers, many of which have been customers for many years. Contracts typically have terms of three to five year and can have terms of ten years or longer in some instances. Such contractual commitments result in the Company dedicating vessel capacity to customers over long periods of time. Failure to renew a significant contract could result in a reduction in revenue and prevent profitable deployment of vessel capacity.

Environmental Matters

Environmental protection continues to be a dominant topic on the world legislative agenda and is a primary focus of the Company throughout its operations. Environmental issues such as aquatic invasive species, pollutant air emissions (SOx and NOx), greenhouse gases (GHGs) and marine protected areas continue to be scrutinized and regulated worldwide. A change in environmental legislation could have a significant impact on the Company’s future operations and profitability, in particular the imposition of a carbon tax or other pricing mechanism for carbon emissions. Reduction of GHGs by the global marine industry is the most prominent topic on the marine industry’s environmental agenda.

The Company’s fleets monitors fuel sulphur levels in accordance with Emission Control Area (ECA) requirements and remains in compliance with all requirements. Domestically, the Company’s highly efficient Equinox Class ships are equipped with closed-loop exhaust gas scrubbers designed to meet the stringent ECA SOx limits. Vessels equipped with scrubbers are able to meet emission standards while burning higher sulphur fuels. The availability of these fuels may be impacted by future demand for this fuel or environmental regulations. The Company’s other vessels, including its ocean-going vessels, use lower sulphur fuels to satisfy air emission rules, such as the global fuel sulphur cap that came into effect in 2020. In the future, the cost and availability of low sulphur fuels may present a risk. In addition there is no certainty the full cost of such fuels or cost related to converting to such fuels can be recovered from all customers, particularly in international markets.

ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS I 22

Canada is a signatory to the IMO Ballast Water Convention. In 2021 the Canadian government brought in new ballast water regulations to implement the international ballast water discharge standard for Canadian waters. These requirements, already in place in the United States (with the exception of lakes vessels), will require installation of ballast water treatment systems on the Company’s vessels during future dry dockings generally no later than September 2024, except for older vessels that operate exclusively in the Great Lakes, which are not required to comply until 2030. Installation of treatment systems on the Company’s vessels will have an impact on operating costs.

Nature of the Shipping Industry

The cyclical nature of the Great Lakes dry-bulk shipping industry may lead to decreases in shipping rates, which may reduce Algoma's revenue and earnings. The shipping business, including the dry-bulk market, has been cyclical in varying degrees, experiencing fluctuations in charter rates, profitability and volumes shipped. Algoma anticipates that the future demand for the Company's vessels and freight revenues will be dependent upon continued demand for commodities, economic growth in the United States and Canada, seasonal and regional changes in demand, and changes to the capacity of the Great Lakes fleet which cannot be predicted. Adverse economic, political, social or other developments could decrease demand and growth in the shipping industry and thereby reduce revenue and earnings.

Fluctuations, and the demand for vessels, in general, have been influenced by, among other factors:

• the impact of climate change on markets served by our customers, including the impact of drought conditions on agricultural outputs and the impact of winter conditions on production and/or sale of certain commodities;

• the economic impact of COVID-19 in Canada, the U.S., and other global markets;

• general economic and market conditions in the countries in which we operate;

• our success in securing contract renewals and maintaining existing freight rates with existing customers;

• our success in securing contracts with new customers at acceptable freight rates;

• developments in international and Great Lakes trade;

• changes in seaborne and other transportation patterns, such as port congestion and canal closures;

• weather, water levels and crop yields;

• political developments; and

• embargoes and strikes.

The Company’s domestic dry-bulk vessels and product tankers operate primarily in the Great Lakes and the St. Lawrence River. Winter conditions during the December to March period and changing water levels in ports in which the vessels load and unload have the effect of increasing or reducing operating days and cargo sizes, and this could affect the profitability of these vessels. Lower water levels can impact cargo sizes by reducing available draft while high water levels can limit access in certain waterways by restricting clearance above a ship.

Fees and Tolls

Certain critical aspects of the Great Lakes – St. Lawrence water transportation system are managed by government and quasi-government agencies. These agencies typically charge fees or tolls for use of the system or for access to services that are required in order to use the system. Some of these agencies face the same shortage of qualified staff that is faced by the Company and in response, these entities have begun to compete more aggressively for staff. This is creating cost increases for companies in the industry both to retain qualified staff and in the form of high fees passed through by the agencies. The Company has attempted to mitigate the impact of these fees by hiring qualified staff; however, this may have the effect of increasing the Company’s costs. The ability of the Company to recover these cost increases from customers is uncertain.

Costs of Incidents

Operating vessels that can weigh tens of thousands of tonnes when fully loaded and which carry materials that may be harmful to the environment is inherently risky. The potential costs that could be incurred by the Company because of these risks include damages caused to property owned by others, the cost of environmental contamination including fines and clean up costs, costs associated with damage to our own assets, and the impact of injuries sustained by our employees or by others. The Company has in place a system designed to guide its employees in the management of all of these risks and is focused on a process of learning and continuous improvement after any incident. The Company also carries insurance designed to provide financial mitigation of costs incurred as the result of an incident; however, there is no guarantee that the insurance coverage will be sufficient to provide full reimbursement of all costs, nor is there any assurance that such insurance will continue to be available in the future at a reasonable cost.

Foreign Exchange

The Company operates internationally and is exposed to risk from changes in foreign currency rates. The foreign currency exchange risk to the Company results primarily from changes in exchange rates between the Company’s reporting currency, the Canadian dollar, and the U.S. dollar. The Company’s exchange risk on earnings of foreign subsidiaries is diminished due to both cash inflows and outflows being denominated in the same currency.

Credit Risk

Credit risk arises from the potential that a counter party will fail to perform its obligations. The Company is exposed to credit risk from its customers. The Company believes that the credit risk for accounts receivable is limited due to the tight credit terms given to customers, minimal bad debts experience and a customer base that consists of a relatively few large industrial concerns in diverse industries.

Regulations

A change in governmental policy could impact the ability to transport certain cargoes or increase the cost of doing so. A policy change could threaten the Company’s competitive position and its capacity to offer efficient programs or services. Often, several different jurisdictions are able to exercise authority over marine transportation and vessel operations. For example, within the Great Lakes – St. Lawrence Waterway there are eight U.S. state governments and two Canadian provincial governments plus both federal governments. The Company expects sufficient warning of a policy change, providing it time to adjust and minimize the impact on the organization. Any such regulatory change would have a similar impact on the Company's waterborne competitors.

The Company has employees participating in a number of industry associations that advise and provide feedback on potential regulatory change and to ensure we maintain current knowledge of the regulatory environment.

23 I ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS

Employee Future Benefits

Economic conditions may prevent the Company from realizing sufficient investment returns to fund the defined benefit pension plans at existing levels. Any increase in the regulatory funding requirements for the Company’s defined benefit pension plans, although a use of resources, is not expected to have a material impact on its cash flows. The Company's defined benefit plan has been closed since 2010.

Judicial and Other Proceedings

From time to time, the Company is a party to judicial, arbitration, or similar proceedings either as claimant or as respondent. Although the Company will take any actions it deems necessary to represent its interests in these proceedings, the ultimate outcomes of such proceedings are outside of the control of the Company. The realizable value of any assets and the exposure to liabilities associated with such proceedings may be different than the carrying value of those assets or liabilities on the financial statements of the Company.

On December 17, 2020, the Company pleaded guilty to a misdemeanour under the Clean Water Act of the United States. The plea was in respect of the negligent discharge of untreated bilge water from the Algoma Strongfield, into the territorial waters of the United States without a permit, on June 6, 2017. The Company has a robust environmental compliance program designed to ensure that its vessels operate in compliance with all applicable environmental and safety regulations, and the company looks forward to strengthening its overall compliance program through the implementation of the Environmental Compliance Plan aboard its Equinox class ships.

Climate Change

The Company’s domestic dry-bulk vessels and product tankers operate primarily in the Great Lakes and the St. Lawrence River. Winter conditions during the December to March period and rising or changing water levels in ports in which the vessels load and unload have the effect of increasing or reducing operating days and cargo sizes, respectively, and this could affect the profitability of these vessels. Harsh winter conditions may also result in more severe ice coverage on the Great Lakes and the St. Lawrence Waterway, resulting in operating delays and delays in the opening of the canals in the system and the movement of cargo.

Drops or significant increases in water levels on the Great Lakes - St. Lawrence Waterway, which the Company has no control over, could have a significant impact on the future operations and profitability of the domestic dry-bulk vessels and product tankers. In 2019, all five Great Lakes were well above their long term water level averages. Water levels in the lower Great Lakes were closer to normal levels in 2020; however, water levels on the upper Great Lakes remain above average.

The geographic diversity of the Company helps to mitigate the potential impact that could result from adverse effects due to lowering water levels and, in addition, a significant number of the domestic dry-bulk and product tanker customer contracts have freight rate adjustment clauses that provide partial financial protection for the impact of changing water levels.

The expectation is that climate change could result in more extreme weather events in the future, which could include increased frequency and severity of gales and storms with longer duration and stronger wind forces. An overall trend towards less ice on the Great Lakes could result in the opportunity of a longer shipping season but with the propensity of more/greater storms, greater overall evaporation due to more open water and increased snowfall. Climate change theory and experience states that there could be more extremes in both temperature and rainfall. High water and low water levels both can negatively effect operations. Further concerns would be older marine infrastructure’s ability to withstand more extreme weather.

Labour Update

Employees and Unions

The normal complement of employees is approximately 1,600, the majority of whom are unionized. The status of the various union agreements are provided below.

Captains and Chief Engineers

All Captains and Chief Engineers of the Company are non-unionized.

Navigation and Engineering Officers

Navigation and Engineering Officers consist of seven separate bargaining units, all of which are represented by the Canadian Merchant Service Guild (CMSG). A new agreement for the NACC fleet was negotiated in 2020 and 2021, and expires on April 30, 2025. Likewise, two new Tanker agreements were negotiated in 2021, with both expiring on July 31, 2028. The next contracts due for negotiation are the four agreements in the DDB fleet, all of which expire in 2023.

Unlicensed Employees

There are six bargaining units for unlicensed shipboard employees. The Seafarers’ International Union (SIU) represents five unlicensed employee bargaining units, three of which are in the NACC Canada Fleet and are presently under negotiation with a desired outcome of merging these units into one group. The next unlicensed contracts due for negotiation are the Unifor and SIU DDB agreements, both of which expire in 2023.

ALGOMA CENTRAL CORPORATION 2021 MANAGEMENT'S DISCUSSION & ANALYSIS I 24

2021

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ALGOMA CENTRAL CORPORATION 63 Church Street, Suite 600, St. Catharines, Ontario L2R 3C4 (905) 687-7888 www.algonet.com