Hanwha Partners with Algoma Steel for Submarine Manufacturing Deal
In a significant development for military procurement, Hanwha Ocean, a South Korean submarine manufacturer, has partnered with Canadian companies, including Algoma Steel. This collaboration aims to support Canada’s efforts in modernizing its submarine fleet.
Details of the Partnership
On October 30, 2025, a memorandum of understanding (MOU) was signed between Hanwha Ocean and Algoma Steel, which is based in Sault Ste. Marie. This MOU entails a financial commitment of $275 million for establishing a new structural steel beam mill. This facility is expected to enhance Algoma’s capabilities in supplying steel for essential infrastructure projects across Canada.
Contract Conditions
Hanwha Ocean’s investment is contingent upon winning a multi-billion-dollar contract from the Canadian government. This contract could see the delivery of up to 12 modern submarines for the Royal Canadian Navy. Alongside the steel beam mill project, the MOU specifies that Hanwha will procure steel products necessary for constructing the new submarine fleet and maintaining support infrastructure on both the east and west coasts of Canada.
- Investment: $275 million to support infrastructure development.
- Contract Value: Approximately $345 million.
- Annual Payment: 3% of Algoma’s net sales from the mill for ten years.
Background and Context
The initiative comes as Algoma Steel faces challenges due to U.S. tariffs affecting its business model, leading to significant layoffs. To assist, the Canadian and Ontario governments have allocated $500 million in financing to stabilize the company during this period.
In addition to its collaboration with Algoma Steel, Hanwha Systems has established co-operation agreements with Canadian firms like Telesat, MDA Space, Cohere, and PV Labs. This expansion is part of a broader strategy to strengthen ties with Canadian industries.
Competitive Landscape
The competition for the lucrative submarine contract has intensified recently. German competitor TKMS has also secured agreements with Canadian firms, such as Marmen in Quebec and Cohere, as part of their bid for the submarine procurement.
The Canadian government is expected to award the submarine contract potentially within this year, making the stakes even higher for Hanwha Ocean and other bidders. As Canada moves towards a more integrated Indo-Pacific defense strategy, partnerships like that of Hanwha and Algoma may play a crucial role in shaping the future of the Canadian military.
