Algoma Steel Group has entered into a binding memorandum of understanding (MOU) with Hanwha Ocean to establish a long-term strategic arrangement linked to Canada’s Patrol Submarine Project (CPSP).
The proposed arrangement has a potential value of up to USD 250 mln, including a USD 200 mln cash contribution from Hanwha Ocean toward the possible development of a structural steel beam mill in Sault Ste. Marie, Ontario, and up to USD 50 mln in anticipated purchases of Algoma steel products for submarine construction and related maintenance, repair and overhaul (MRO) infrastructure in Canada.
The MOU is intended to support Hanwha Ocean’s Industrial and Technological Benefits (ITB) obligations under the CPSP and to strengthen Canada’s domestic steel and defence supply chain. If the beam mill proceeds, it is expected to create long-term skilled jobs and support the Royal Canadian Navy’s future operational needs.
The MOU is conditional on Hanwha Ocean being awarded and entering into an effective contract under the CPSP, as well as the execution of definitive agreements with Algoma. Under the terms of the MOU, Algoma would be required to make annual payments to Hanwha Ocean equal to 3pct of net sales from the beam mill facility for a period of ten years following the start of operations, subject to the facility’s financial performance.
Algoma Steel, based in Sault Ste. Marie, is transitioning to electric arc furnace (EAF) steelmaking and supplies hot- and cold-rolled steel to the automotive, construction, energy and defence sectors across North America.
