Roshel Algoma Defence Partnership to Strengthen Canada's Defence Industrial Base

• On 7 Apr 2026 Algoma Steel announced a 50/50 joint venture with Roshel Inc., named Roshel‑Algoma Defence (RADS).
• RADS will create a Canadian Centre of Excellence for ballistic steel, leveraging Algoma’s plate mill and electric arc furnace (EAF) capabilities together with Roshel’s armoured‑vehicle expertise.
• The JV targets supply to Canada’s Light Utility Vehicle (LUV) programme, the Domestic Arctic Mobility Enhancement (DAME) effort, naval vessels, submarines and broader defence platforms, plus export opportunities to allied nations.
• It is positioned as a sovereign solution that aligns with Canada’s Defence Industrial Strategy and “Buy‑Canadian” policies, supporting >500 jobs.

• Strategic diversification: Algoma has historically relied on domestic plate/coils and government liquidity. The JV opens a new defence‑steel product line with higher margins and longer‑term contracts (e.g., LUV procurement).
• Revenue upside: Ballistic steel is a niche, high‑value market; even modest volumes could materially improve earnings given the current adjusted EBITDA loss range of –$95 M to –$105 M (Q1 2026 guidance).
• Risk mitigation: By anchoring part of its future to defence contracts, Algoma reduces exposure to cyclical construction/industrial demand and to U.S. Section‑232 tariffs that have already forced an exit from the U.S. market.
• Capital requirement: No immediate cash outlay is disclosed; the JV will likely use existing plant capacity (Algoma’s EAF) and may be funded partly by the $500 M government liquidity facility already in place.
• Market perception: The announcement follows a series of negative earnings releases and leadership changes, so it provides fresh positive catalyst that could halt the recent price decline.

Overall, the partnership is new, unexpected (no prior hint of a ballistic‑steel JV) and carries material upside potential, justifying a Material – Positive rating.

Algoma Steel Group Inc. is Canada’s sole producer of discrete plate steel, undergoing a transformation from a traditional blast‑furnace/coke‑oven operation to an electric arc furnace (EAF) low‑carbon platform (“Volta™” brand). The EAF project targets ~3.7 Mt/yr raw steel capacity with ~70 % CO₂ reduction. The flagship product line is high‑strength plate for construction, infrastructure and now ballistic‑steel defence applications.