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

Core Viewpoint - Algoma Steel Group Inc. has entered into a binding memorandum of understanding with Hanwha Ocean Co., Ltd. to support Canada's future submarine program with Canadian steel and expertise, representing a strategic partnership valued at approximately USD $250 million (CAD $345 million) [1][2]. Group 1: Strategic Partnership Details - The MOU includes a cash contribution of USD $200 million (CAD $275 million) for the potential development of a structural steel beam mill in Sault Ste. Marie, Ontario, and anticipated purchases of Algoma products valued at up to USD $50 million for the Canadian Patrol Submarine Project [2]. - The arrangement aims to strengthen Canada's domestic industrial base and support the operational needs of the Royal Canadian Navy, potentially creating new skilled jobs in Canada [3][5]. Group 2: Financial and Operational Commitments - Algoma will make annual payments to Hanwha Ocean for ten years, amounting to 3.0% of the net sales from the beam mill facility, contingent on its financial performance [4]. - The MOU is contingent upon Hanwha Ocean being awarded a contract under the Canadian Patrol Submarine Project and the execution of definitive agreements with Algoma [4]. Group 3: Industry Impact and Future Directions - This partnership aligns with Canada's Buy Canadian policy, promoting domestic supply chains and supporting industrial sovereignty and job creation in a global context [5]. - Algoma is transitioning to electric arc furnace steelmaking, which is expected to reduce carbon emissions by approximately 70% once fully operational, marking a significant step in industrial decarbonization in North America [10].