Imagine a multi-billion-dollar submarine deal that could reshape Canada’s defense industry and create hundreds of jobs—but only if a South Korean shipbuilder wins the contract. This is the high-stakes scenario unfolding right now, as Hanwha Ocean, a leading Korean shipbuilder, has agreed to a $345 million deal with Algoma Steel, a move that could be a game-changer for both companies. But here’s where it gets controversial: the deal hinges entirely on South Korea securing a $12 billion contract to build a new fleet of submarines for the Canadian military, pitting them against fierce competition from Germany. And this is the part most people miss: if successful, this partnership wouldn’t just build submarines—it would also establish a state-of-the-art structural steel beam mill in Sault Ste. Marie, Ontario, bolstering Canada’s industrial sovereignty and naval readiness for decades to come.
This week, a South Korean delegation arrived in Canada to lobby for their bid, emphasizing their commitment to integrating Canadian steel and labor into the project. On Monday, Algoma Steel and Hanwha Ocean announced a binding Memorandum of Understanding (MOU) that outlines a bold vision: to combine South Korea’s shipbuilding expertise with Canada’s steelmaking capabilities. Under the agreement, Algoma would receive $275 million to develop the beam mill, with an additional $70 million in guaranteed purchases of its steel for submarine production. The steel produced would be used not only for submarine construction but also for maintenance, repair, and overhaul infrastructure, ensuring the fleet’s long-term sustainability in Canada.
But is this partnership a win-win, or does it come with hidden costs? Critics might argue that tying Canada’s defense capabilities to foreign contractors could undermine national autonomy. Yet, proponents highlight the creation of skilled, long-term jobs and the strengthening of Canada’s domestic industrial base. Algoma Steel, which has faced significant challenges due to U.S. tariffs on steel exports and recently announced layoffs of 1,000 workers, sees this deal as a lifeline. For Hanwha Ocean, it’s an opportunity to expand its global footprint, having already built over 1,400 vessels, including submarines for the Republic of Korea Navy.
Hee Cheul Kim, CEO of Hanwha Ocean, framed the partnership as a collaborative effort to build something lasting, while Algoma CEO Rajat Marwah called it a foundational step in the company’s diversification strategy. Marwah also praised the Canadian government’s policies supporting domestic manufacturing and supply-chain resilience. But here’s a thought-provoking question: As Canada seeks to modernize its naval capabilities, should it prioritize partnerships with foreign entities like South Korea, or double down on homegrown solutions? Let us know your thoughts in the comments—this debate is far from over.
