Algoma to supply Korean shipbuilder

Algoma Steel Inc. has entered into a binding memorandum of understanding (MOU) with Hanwha Ocean Co. Ltd. to supply Canadian-made steel for a planned future submarine building program for the Royal Canadian Navy.

The MOU has been made with the anticipation that Sault Ste. Marie, Ontario-based Algoma can supply South Korea-based Hanwha Ocean in connection with its potential Canadian Patrol Submarine Project (CPSP)-related commitments.

That project involves submarine construction and the development of maintenance, repair and overhaul (MRO) infrastructure required to support the newly built fleet throughout its operational life cycle in Canada.

“The MOU is structured to support Hanwha Ocean’s ability to satisfy its Industrial and Technological Benefits (ITB) obligations in connection with the CPSP,” Algoma says.

Algoma recently commissioned a large-tonnage recycled electric arc furnace (EAF) melt shop in Sault Ste. Marie. Historically, as much as 50 percent of steel made by Algoma has entered the United States market, but that trade path recently has been stymied by a 50 percent tariff on Canadian steel levied by the U.S.

The steelmaker says the Hanwha MOU could carry a potential aggregate value of $250 million, including the purchase of steel by the shipbuilder and the funding of a downstream structural steel beam mill in Sault Ste. Marie.

“As we usher in a new era for Algoma with EAF steelmaking and modernized finishing capabilities, this strategic arrangement with Hanwha Ocean represents a foundational step forward in our diversification strategy,” Algoma Steel CEO Rajat Marwah says.

“It reinforces our focus on becoming Canada’s leading sustainable steelmaker, aligned with the country’s nation-building priorities in defense and infrastructure. We also recognize and applaud the government of Canada’s support for policies that strengthen domestic manufacturing, supply-chain resilience, and long-term industrial capability.”

The MOU is subject to Hanwha Ocean being awarded and entering into an effective contract under the CPSP, according to Algoma.

“The MOU also provides that Algoma will be required to make annual payments to Hanwha Ocean for 10 years following the commencement of operations of the beam facility equal to 3.0 percent of the net sales of the beam mill facility, subject to its financial performance,” the steelmaker says.

Algoma Steel says it has allied with Hanwha Ocean to underpin Canada’s future submarine program with Canadian steelmaking capability and Canadian workers, supporting long-term naval readiness and industrial sovereignty.

“This partnership is about working side by side with Algoma as a leading Canadian steelmaker to build something lasting," Hanwha Ocean President and CEO Hee Cheul Kim says. "By anchoring steel production, infrastructure and long-term sustainment in Canada, we are committed to strengthening Canada’s industrial resilience and supporting a submarine capability that Canadians can rely on today and for generations.