Algoma Steel and Hanwha Ocean Sign Binding Memorandum of Understanding (MOU) for Long-term Strategic Arrangement supporting Canadian Patrol Submarine Project

Executive Summary

• Algolia Steel’s subsidiary entered a binding Memorandum of Understanding with Hanwha Ocean for up to USD 250 million (≈CAD 345 million) to support a proposed structural steel beam mill and future purchases tied to Canada’s submarine program.
• The MOU outlines a cash contribution of USD 200 million (≈CAD 275 million) for the beam‑mill project and up to USD 50 million (≈CAD 70 million) in product purchase commitments for CPSP‑related needs.
• If executed, the arrangement could create new skilled Canadian jobs, reinforce domestic industrial sovereignty, and advance Algoma’s diversification and green‑steel strategy.

Key Details

• MOU Value: Aggregate potential USD 250 million (≈CAD 345 million).
• Cash Component: USD 200 million (≈CAD 275 million) earmarked for development of a structural steel beam mill in Sault Ste. Marie, Ontario.
• Purchase Commitment: Up to USD 50 million (≈CAD 70 million) of Algoma products for use in the Canadian Patrol Submarine Project (CPSP), including submarine construction and Maintenance‑Repair‑Overhaul (MRO) infrastructure.
• Payment Structure: Algoma will make annual payments to Hanwha Ocean for ten years after beam‑mill operations commence, equal to 3.0 % of net sales of the beam‑mill facility, subject to financial performance.
• Conditions: MOU is contingent upon Hanwha Ocean being awarded and entering into an effective CPSP contract and on execution of definitive agreements between the parties.
• Strategic Rationale: Supports Hanwha Ocean’s Industrial and Technological Benefits (ITB) obligations under CPSP; strengthens Canada’s domestic industrial base, supply‑chain resilience, and long‑term naval readiness.
• Potential Impact: Creation of new skilled, long‑term Canadian jobs if the beam mill proceeds; aligns with Algoma’s diversification strategy and transition to electric arc furnace (EAF) steelmaking, contributing to a greener steel portfolio.

Notable Quotes

• “This partnership is about working side by side with Algoma as a leading Canadian steelmaker to build something lasting… strengthening Canada’s industrial resilience and supporting a submarine capability that Canadians can rely on today and for generations.” – Hee Cheul Kim, President & CEO, Hanwha Ocean
• “This strategic arrangement … represents a foundational step forward in our diversification strategy… reinforces our focus on becoming Canada’s leading sustainable steelmaker.” – Rajat Marwah, CEO, Algoma Steel