South Korean Submarine Builder Hanwha Ocean Inks Major $345 Million Steel Agreement with Algoma
In a significant development for Canada's defence industrial base and manufacturing sector, South Korea's Hanwha Ocean has signed a substantial $345 million memorandum of understanding (MOU) with Sault Ste. Marie-based Algoma Steel Inc.. This strategic partnership is directly tied to Hanwha Ocean's active bid to secure a lucrative contract to build new submarines for the Royal Canadian Navy.
A Strategic Alliance Forged in Steel
The agreement, announced on January 26, 2026, outlines a framework for Algoma Steel to supply high-grade steel plate to the Korean shipbuilding giant. This material is a critical component in modern submarine construction, requiring specific properties for strength, durability, and performance in marine environments. The deal represents a major commitment and a vote of confidence in Canadian industrial capability from a leading global defence contractor.
The MOU follows high-level diplomatic and industrial engagement, including a notable visit by Canadian officials to Hanwha's Geoje Island shipyard in October 2025. The tour featured National Defence Minister David McGuinty and Prime Minister Mark Carney alongside South Korean Prime Minister Kim Min-seok and Hanwha Group Vice-Chairman Kim Dong Kwan, underscoring the strategic importance both nations place on this potential partnership.
Boosting Canadian Industry and the Defence Bid
For Algoma Steel, a pillar of Northern Ontario's economy, this agreement promises to secure significant production and support jobs at its Sault Ste. Marie facilities. The deal aligns with broader federal and provincial efforts to anchor major defence procurement projects within the Canadian supply chain, ensuring economic benefits are realized domestically.
For Hanwha Ocean, securing a reliable, high-quality source of specialized steel from a NATO-aligned nation like Canada is a strategic move. It strengthens their bid for the Canadian submarine program by demonstrating a tangible commitment to Canadian industry participation and economic benefits, key factors often weighed heavily in government procurement decisions. This local partnership could provide a competitive edge against other international bidders.
The Context of a Major Defence Procurement
This steel pact occurs against the backdrop of Canada's ongoing efforts to modernize its underwater fleet. The Royal Canadian Navy's submarine capability is a cornerstone of maritime sovereignty and Arctic defence. A contract of this magnitude would be one of the largest defence acquisitions in recent years, with the potential to sustain and create thousands of jobs across the country's advanced manufacturing and technology sectors.
The collaboration between Hanwha Ocean and Algoma Steel exemplifies the type of technology transfer and industrial partnership that Canadian defence policy often seeks to foster. It highlights how major international defence projects can serve as catalysts for investment and innovation in foundational industries like steel manufacturing.
As the submarine procurement process advances, this $345 million MOU stands as a concrete first step, signaling serious intent and laying the groundwork for a deeper industrial relationship between a Korean defence leader and a historic Canadian steelmaker.
