In a significant move for Canada’s military capabilities, Prime Minister Mark Carney is poised to announce the selection of Thyssenkrupp Marine Systems (TKMS) from Germany for a major submarine procurement programme. This decision, set to be revealed in Halifax on Monday, marks a decisive moment in a competitive bidding process involving South Korea’s Hanwha, as Canada seeks to bolster its naval forces with an unprecedented fleet of 12 submarines.
A Game-Changing Acquisition
The strategic procurement will allow Canada to enhance its ability to monitor and protect its extensive coastlines, a necessity given the evolving geopolitical climate. Currently, Canada’s submarine fleet consists of four second-hand vessels, with only one typically operational. The new acquisition will provide the Royal Canadian Navy with the capability to deploy three submarines simultaneously, a significant increase from its current operational capacity.
As outlined by David Perry, president of the Canadian Global Affairs Institute, this initiative represents a crucial step toward ensuring Canada can effectively safeguard its maritime borders. “It will give us much more of an ability to independently know what’s happening around our own Canadian coastal waters,” Perry emphasised.
The Competitive Landscape
The announcement will conclude a fierce rivalry between TKMS and Hanwha, both of which have aggressively pursued the contract, with economic benefits as a focal point. The procurement programme is expected to be valued between $20 billion and $30 billion, with operational costs potentially reaching an additional $40 billion to $50 billion.
Canada’s decision-making process has primarily revolved around the economic advantages that each bidder can provide. Hanwha has committed to investing over $70 billion in trade and job creation in Canada, promising more than 25,000 jobs annually from 2026 to 2044. Conversely, TKMS, in collaboration with Norway, has projected an economic boost of $86 billion to Canada’s GDP throughout the life of the contract, including the creation of over 650,000 job years.
Despite initial speculation regarding a potential split contract between the two bidders, government officials have recently downplayed this possibility, indicating a preference for a single supplier.
The Broader Defence Context
This submarine acquisition is part of a broader initiative to elevate Canada’s defence spending to levels not seen since the Cold War, with a target of 5 per cent of Gross Domestic Product by 2035 to meet NATO commitments. The Canadian military has identified the need for a robust submarine fleet, citing that ideally, one in every four vessels should be operational at any time.
Since August 2025, both competing firms have engaged in intensive lobbying efforts to win over Ottawa, with South Korea deploying a submarine to showcase its technological prowess. The engagement from both nations has highlighted the importance of this contract, with South Korea keen to expand its military industry and establish a foothold in the Canadian market.
Industrial Benefits and Strategic Partnerships
Industrial benefits remain a critical component of the procurement process, with Canada expecting suppliers to invest domestically in line with contract fulfilment. As part of its bid, Hanwha has pledged to invest $200 million to assist Algoma Steel in establishing a mill in Ontario, while also committing to procure $50 million worth of steel for the submarine project.
The robust competition has led to an unprecedented level of public diplomacy from both bidders, with senior officials from Germany, Norway, and South Korea actively participating in the campaign. “The public campaign by Hanwha and South Korea has been more visible and assertive than what we typically see in Canadian military procurements,” noted Philippe Lagassé, a defence policy expert.
Why it Matters
The decision to select TKMS for this significant submarine contract not only bolsters Canada’s naval capabilities but also represents a pivotal shift in the nation’s defence strategy. With an increased focus on domestic industrial benefits, this procurement promises to create thousands of jobs and stimulate economic growth across the country. As Canada positions itself to enhance its military readiness, the implications of this decision will resonate well beyond the immediate defence landscape, reinforcing the country’s commitment to safeguarding its sovereignty in an increasingly complex global arena.
