Canadian Country Life

Nation Building

In a move that feels like a masterclass in “nation-building,” Sault Ste. Marie’s own Algoma Steel has just anchored a massive partnership with South Korean shipbuilding giant Hanwha Ocean.

Announced on January 26, 2026, this binding Memorandum of Understanding (MOU) isn’t just about making steel—it’s about the future of Canadian naval sovereignty and a major lifeline for the local economy.

The Meat of the Deal

The agreement carries a total potential value of $345 million (CAD). But here’s the kicker: it’s all tied to a high-stakes competition. Hanwha Ocean is currently vying for the Canadian Patrol Submarine Project (CPSP), a multi-billion-dollar federal contract to replace the Royal Canadian Navy’s aging submarine fleet with up to 12 modern vessels.

If Hanwha wins the bid, here is what’s on the table for Algoma:

• $275 Million for a New Mill: Hanwha will provide a cash injection to help Algoma stand up a brand-new structural steel beam mill in Sault Ste. Marie.
• $70 Million in Guaranteed Orders: Hanwha intends to purchase steel directly from Algoma for submarine construction and the infrastructure needed to maintain them.
• A “Pay-It-Forward” Clause: Once the mill is operational, Algoma will pay Hanwha 3% of the mill’s net sales for 10 years—a strategic revenue-share that keeps both companies invested in each other’s success.

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Why This Matters Right Now

This news couldn’t have come at a more critical time. Algoma Steel has recently navigated choppy waters, including significant layoffs and the sting of international tariffs.

1. Job Creation: Experts suggest the new mill could create up to 500 new skilled jobs, potentially rehiring many of the workers impacted by recent downturns.
2. Industrial Sovereignty: By “buying Canadian,” Hanwha is helping Canada ensure that its national defense isn’t just imported, but built with Canadian hands and Canadian steel.
3. Green Transition: This deal aligns with Algoma’s ongoing shift toward Electric Arc Furnace (EAF) steelmaking, positioning the company as a leader in sustainable, “green” steel for defense and infrastructure.

“This partnership is about working side-by-side with Algoma… to build something lasting. By anchoring steel production and long-term sustainment in Canada, we are committed to strengthening Canada’s industrial resilience.” — Hee Cheul Kim, President & CEO of Hanwha Ocean

The Competitive Landscape

It’s not a done deal just yet. Hanwha is locked in a “two-horse race” with Germany’s ThyssenKrupp Marine Systems (TKMS). While the Germans have also been busy signing agreements with Canadian firms, Hanwha’s $345 million commitment to Algoma is a bold statement of intent.

What’s Next?

The ball is now in the federal government’s court. The submarine contract could be awarded as early as later this year. If the South Korean bid secures the win, we can expect to see ground breaking on the new beam mill shortly after.