South Korean sub maker Hanwha signs agreement with Algoma Steel

OTTAWA — South Korean submarine maker Hanwha announced Monday it had signed a flurry of partnership agreements with Canadian companies, including Sault Ste. Marie’s tariff-battered Algoma Steel, as it vies for a massive Canadian military procurement contract.

Hanwha Oceans said it signed a memorandum of understanding with Algoma that pledges $275 million in financial support to stand up a new structural steel beam mill.

The pact also declares Hanwha’s intention to purchase steel products for both the construction of Canada’s new submarine fleet and the maintenance infrastructure on both coasts to support it.

Both commitments come on the condition that Hanwha wins Ottawa’s massive, multi-billion-dollar procurement contract to supply the Royal Canadian Navy with up to 12 modern submarines.

The company said in a news release Monday that the agreement is worth some $345 million. The proposed beam mill would allow Algoma to supply steel for Canadian infrastructure, housing and road projects.

The MOU also mandates that once Algoma establishes the new facility, the Canadian steel company must make annual payments to Hanwha Ocean worth three per cent of net sales from the mill for a decade.

U.S. President Donald Trump’s aggressive steel tariffs have disrupted Algoma’s business model and effectively shut it out of the U.S. market, resulting in the company recently announcing layoffs for some 1,000 workers.

The federal and Ontario governments have also provided Algoma with $500 million in financing to help support the company through this tumultuous period.

Hanwha Systems, another arm of the massive South Korean conglomerate, also signed co-operation agreements on Monday with Telesat, MDA Space, Cohere and PV Labs — all while a South Korean delegation of government and business officials visited Toronto.

Rival German bidder TKMS has meanwhile signed teaming agreements with Canadian companies related to its submarine procurement bid, including Quebec manufacturer Marmen and Cohere, an artificial intelligence company.

The battle for the lucrative submarine contract has heated up over the past year. It’s possible the contract could be awarded as early as this year.

This report by The Canadian Press was first published Jan. 26, 2026.