Canada nears decision on submarine contract between Hanwha and TKMS

Hanwha offers expedited delivery; TKMS stresses NATO ties

Canada is expected to select a preferred bidder soon for the Canadian Patrol Submarine Project, a program intended to replace the country’s four aging Victoria-class submarines with as many as 12 new conventionally powered vessels. Industry estimates put the value of the program at up to 60 trillion won, or about $39.3 billion, including shipbuilding and long-term maintenance.

The timing of the decision has drawn attention because Prime Minister Mark Carney is scheduled to attend the NATO summit in Ankara, Turkey, from Monday to Wednesday. A decision announced near the summit could carry a political message about Canada’s defense cooperation with allies.

Hanwha Ocean, a South Korean shipbuilder, has proposed a model based on the KSS-III Batch-II submarine, a 3,000-ton-class hybrid diesel-electric submarine developed for the South Korean Navy. The submarine uses fuel-cell air-independent propulsion and lithium-ion batteries, allowing it to remain submerged for more than three weeks. The vessel has a range of more than 7,000 nautical miles, or about 8,055 miles.

Hanwha Ocean has proposed delivering the first submarine in 2032 if a contract is signed in 2026. The company has said it could deliver four submarines by 2035 and then supply one additional submarine each year. Delivery timing is considered a key factor because Canada’s Victoria-class submarines are expected to retire in the mid-2030s.

Germany’s TKMS, a European market leader that supplies most of NATO’s conventional submarines, is competing by stressing its more than 100 years of submarine-building experience and interoperability with NATO navies. TKMS CEO Oliver Burkhard has expressed confidence that the company can win the contract.

German Vice Chancellor and Finance Minister Lars Klingbeil recently visited a TKMS site and said Berlin was making a broad push to support defense cooperation with Canada. Klingbeil said Germany’s high production standards and submarine-building capacity put TKMS in a strong position.

Hanwha Ocean is also seeking to strengthen its bid through long-term maintenance, repair and overhaul plans and industrial partnerships in Canada. The company has promoted cooperation in shipbuilding, steel, artificial intelligence, space and defense technology. The broad trade-weighted U.S. dollar index stood at 120.8866 as of July 5.

If Hanwha Ocean is selected as the preferred bidder, it would mark a major breakthrough for South Korea’s shipbuilding and defense industries in North America and would expand South Korea’s submarine exports beyond Asia and Europe. But TKMS remains a strong competitor because Canada may value closer defense industrial cooperation with Germany and other NATO partners at a time of heightened security concerns in the Arctic and North Atlantic. Hanwha Ocean said no decision has been made.