Hanwha promises military-vehicle deal for Algoma Steel if it gets Canadian submarine contract

due south Korean defence business firm Hanwha and Algoma nerve proclaimed a young deal Monday to supply military-grade steel for the possible manufacturing of land defence vehicles in Canada.

In a new memorandum of understanding (MOU) signed Monday, the companies pledged to work with the Automotive Parts Manufacturers' Association (APSA). Hanwha had signed an agreement with APSA in April on a prospective joint venture to make military land vehicles for the Canadian Armed Forces and for export to allies.

The deals are part of Hanwha's bid to supply the Royal Canadian Navy with a fleet of up to 12 submarines and are contingent on Hanwha winning the contract. Hanwha and its competitor, ThyssenKrupp Marine Systems of Germany, have pledged billions in economic benefits to Canada should the government choose them.

Canadian officials said at an arms expo in Ottawa last week that the federal government is expected to announce the winner of the sub contract this month.

Hanwha made the steel announcement at a Martinrea International facility in Vaughan, Ont., alongside a delegation of South Korean government officials. 

"Today's MOU between APMA, Algoma Steel and Hanwha will serve as a milestone for another key pillar of Canadian industry, the steel sector, to participate in a new model of cooperation," Kang Hoon-sik, chief of staff to Korea's president, said at the news conference through a translator.

"The significance lies in establishing a complete supply chain within Canada, starting from raw materials to parts to finished vehicles."

Kang said he anticipates the agreement would "greatly contribute to Canada's industrial sovereignty, security and job creation."

Algoma Steel, which is based in Sault Ste Marie, Ont., has been hit hard by U.S. President Donald Trump's tariffs on Canadian steel. Earlier this year, the company laid workers off as part of plans to reduce its workforce by 1,000.

The agreement is "another step forward for Algoma and its diversification endeavors," said John Naccarato, Algoma's vice-president of strategy and chief legal officer.

"We are the only steel producer in Canada that can make ballistic-grade steel for defence applications," he said in an interview.

"It's a great opportunity to be part of a consortium that will respond to Canada's national priorities around defence spending."

Whether the proposed agreement comes to fruition is entirely dependent on the federal government choosing Hanwha to supply Canada with submarines, Naccarato said.

Flavio Volpe, president of APMA, said there would be big benefits to Canada's manufacturing sector if it does.

"The economic activity that comes from that deal for automotive, is the equivalent of one new car plant here," Volpe said.

"What that means is probably 15,000 direct jobs through the supply chain and another 15,000 that are indirect."

Building defence vehicles would not pose a challenge, he said, calling it "easy" compared to automotive.

"Give us a shot, and we won't let you down."

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