Ottawa's long-running conversation about boosting Canada's defence manufacturing capacity just got a major shot in the arm. South Korean defence giant Hanwha has announced it has reached a deal with Algoma Steel to supply military-grade steel for the possible production of land defence vehicles right here in Canada — a move that defence watchers say underscores how seriously international players are treating Ottawa's military procurement ambitions.
What the Deal Involves
Hanwha, one of the world's leading defence manufacturers and the maker of the AS21 Redback infantry fighting vehicle, confirmed the agreement with Algoma Steel, the Sault Ste. Marie-based steelmaker. Under the arrangement, Algoma would supply the specialized, high-hardness steel required to build armoured military vehicles should Canada move forward with a domestic manufacturing program.
The timing is no accident. Canada is in the middle of a sweeping review and expansion of its defence procurement strategy, with billions of dollars earmarked for ground-based military equipment as NATO allies ramp up pressure on member nations to hit the 2% of GDP defence spending target. Ottawa has signalled it wants to see as much of that spending as possible translate into Canadian jobs and industrial capacity.
Why Canadian Steel Matters
Using domestically produced steel for military vehicles isn't just about optics — it's a strategic calculation. Supply chain resilience has become a top priority for Western governments since the COVID-19 pandemic exposed just how fragile global logistics can be. For defence procurement specifically, having a reliable domestic supply of military-grade materials means Canada wouldn't be dependent on foreign sources during a conflict or geopolitical crisis.
Algoma has been positioning itself as a key player in the green steel transition, recently investing heavily in electric arc furnace technology. Military-grade steel production would represent another high-value niche for the company and help secure skilled manufacturing jobs in Ontario.
The Ottawa Policy Connection
For federal decision-makers on Parliament Hill, deals like this one are exactly what the government has been trying to catalyze. Ottawa has faced sustained criticism from allies — most pointedly from Washington — for falling short of its NATO spending commitments. Domestic defence manufacturing partnerships that tie international contractors to Canadian suppliers are seen as a way to accelerate spending while building long-term industrial capacity.
Hanwha is one of several international defence firms competing for Canadian land vehicle contracts, and demonstrating a commitment to Canadian supply chains — like sourcing steel from Algoma — is increasingly a prerequisite for winning federal business.
What Comes Next
The deal is contingent on Canada actually proceeding with land vehicle manufacturing, which remains a procurement process still working its way through federal channels. But the Hanwha-Algoma agreement is a strong signal that at least one major international player is betting Ottawa will follow through.
For Canadians watching the defence file, it's a reminder that the decisions made in the capital have real economic ripple effects — from Sault Ste. Marie's steel mills to the broader Canadian industrial ecosystem.
Source: Global News Ottawa
