Algoma Steel facilities in Sault Ste. Marie, Ont., in 2024.Deborah Baic/The Globe and Mail
Algoma Steel ASTL-T will supply metals to the Canadian consortium that plans to build combat vehicles in partnership with Hanwha Group, should the South Korean conglomerate win the contract to build 12 submarines for Canada.
Representatives of Algoma, Hanwha and several Ontario-based auto parts makers signed the memorandum of understanding on Monday at a Martinrea International factory near Toronto.
Algoma joins Hanwha and the Automotive Parts Manufacturers’ Association, which agreed recently to jointly develop and manufacture fighting vehicles for the Canadian Armed Forces and allies. In a separate pact, Hanwha has also agreed to invest in Algoma.
South Korean, German bidders make final pitches on Canadian sub deal
All the agreements are contingent on Hanwha beating Germany’s TKMS for the multibillion-dollar submarine deal when the federal government makes its decision in the coming weeks.
Kang Hoon-sik, Korean special envoy and presidential chief of staff, told The Globe and Mail the submarine deal is “critical” to the advancement of the industrial relationship between Canada and South Korea.
“Co-operation in the industrial defence sector requires high level of co-operation and partnership,” he said through an interpreter. “We need the high-level contract, which will trickle down and follow through to the award of the smaller contracts.”
Kang Hoon-sik, second from right, chief of staff to the president of South Korea, walks the manufacturing floor with employees as he visits Martinrea International, in Woodbridge, Ont., on Monday.Nathan Denette/The Canadian Press
In a speech at the Martinrea factory, he said the country plans to increase its investment in a Canadian liquefied natural gas project to $3.2-billion, and boost imports of Canada’s petroleum products.
In an interview, Mr. Kang said Korea needs to diversify its energy supplies beyond the Middle East, and it could make the Canadian energy purchases no matter what the outcome of the submarine deal is.
John Naccarato, Algoma’s vice-president of strategy, told The Globe he welcomed the chance to supply the project with steel, pointing to Hanwha’s deep industrial experience.
Canada is looking to purchase the combat vehicles as it boosts defence spending and fosters domestic industries while shifting its trade policies away from the U.S., which has applied tariffs on Canadian-made cars and other goods.
Hanwha would model its Canadian military vehicle partnership on its Australian venture, which makes self-propelled howitzers and infantry fighting vehicles.
Hanwha would supply the expertise, technology and experience as well as making a yet-to-be-determined investment in the Canadian venture, which would be 51-per-cent owned by Canada’s companies using domestic steel and workers.
“They are interested in supplying submarines to Canada but also doing much more with industry here in Ontario and in Canada as they develop their defence capabilities,” said Rob Wildeboer, executive chairman of Martinrea.
Hanwha’s businesses include defence, clean energy and banking. An explosion at its Daejeon rocket propellant factory on Monday killed five people and injured two.
The U.S. tariffs have cost Ontario auto jobs, reduced exports and left companies looking for new markets.
Flavio Volpe, head of the auto parts group, said the Korean partnership shows the industry can pivot and diversify into new products and markets.
“We’ve worked very closely together to create a Canadian-controlled joint venture together with them, with the biggest Canadian automotive parts companies and biggest investors to build this future together,” he said, standing in front of Project Arrow, a Canadian-made prototype car whose development he spearheaded to showcase the industry’s know-how.
The Hanwha collaboration could yield products on a “massive scale” that would protect Canada, its jobs and serve other countries, as well, he said.