It’s one part of a $345-million deal that’s conditional on Hanwha Ocean winning a multi-billion-dollar contract to provide as many as a dozen submarines to the Royal Canadian Navy

Before the ground has been broken for a proposed structural beam mill at Algoma Steel, before the Sault steelmaker has even formally agreed to build it, the company has committed to turn over three per cent of the facility’s net sales every year to South Korean shipbuilder Hanwha Ocean Co. Ltd.

The two companies announced today that Algoma will be required to make the annual payments for 10 years, subject to financial performance.

The beam mill outlays were one part of a deal that could provide Algoma with as much as $345 million for advancing its diversification strategy and domestic supply for defence procurement.

Federal industry minister Mélanie Joly announced on Dec. 5 that Algoma is expected to create 500 new jobs in two yet-to-be-constructed facilities: one for manufacturing structural beams and the other for enhanced plate.

A memorandum of understanding (MOU) signed by Algoma and Hanwha includes the following terms:


a cash contribution of about $275 million toward the potential development of a structural steel beam mill in Sault Ste. Marie
anticipated purchases of Algoma products with an aggregate value up to US$50 million for use in connection with Canadian Patrol Submarine Project (CPSP)-related commitments including submarine construction and the development of maintenance, repair and overhaul infrastructure needed to support the fleet throughout its operational lifecycle in Canada
the MOU is subject to Hanwha Ocean being awarded and entering into an effective contract under the CPSP and the execution of definitive agreements with Algoma.

Here’s how Hanwha Ocean described itself today in a news release:

“Hanwha Ocean is a leading global shipbuilder with more than four decades of experience in complex naval and commercial shipbuilding programmes.

“Supported by its large-scale, integrated shipyard in Geoje, South Korea, the company combines proven industrial capacity with operational experience to deliver modern, in-service naval platforms backed by a resilient through-life support model.”

The ship builder’s website says Hanwho has delivered more than 1,400 vessels worldwide since its founding in 1973.

It has also “built deep expertise in the design, construction, and sustainment of submarines and surface combatants for the Republic of Korea Navy.”

“Hanwha Ocean’s shipyards cover an area of approximately 5,000,000 m², employ around 31,000 people, and build approximately 45 commercial and naval ships each year.”

So far, Hanwha Ocean has built three of its KSS-III Batch-I submarines.

All are currently in active service with the Republic of Korea Navy.

“Building on this proven track record, Hanwha Ocean is now constructing three KSS-III Batch-II submarines. The first KSS-III Batch-II was launched in October 2025,” the company says on its website.

“Leveraging our proven expertise and robust industrial capacity, Hanwha Ocean is fully prepared to deliver the first KSS-III Canadian Patrol Submarine (CPS) within six years of contract award, with subsequent units delivered annually thereafter.”

“Assuming a contract award in 2026, Hanwha Ocean can deliver four submarines by 2035, with the first arriving in 2032 and subsequent units delivered annually.”

“Only the KSS-III CPS can meet Canada’s urgent delivery timeline …. ensuring the Royal Canadian Navy to achieve its stated objective of having new submarine capacity delivered in time to replace the Victoria Class fleet,” the website states.

“Powered by advanced lithium-ion batteries and equipped with a fuel cell-based air independent propulsion system, the KSS-III CPS offers the longest submerged endurance of any conventional submarine. It is mission-optimized for anti-submarine warfare, anti-surface warfare, intelligence, surveillance, reconnaissance, minelaying, and special operations forces support.”

Hanwha’s only major competitor for Canada’s 12-submarine contract is Germany’s ThyssenKrupp Marine System.