Prime Minister Mark Carney is set to unveil a pivotal announcement in Halifax on Monday regarding the highly anticipated winner of a substantial contract to supply Canada with twelve new submarines. This decision, which comes after an intense competition between Germany’s ThyssenKrupp Marine Systems (TKMS) and South Korea’s Hanwha, could significantly enhance Canada’s naval capabilities and reshape its maritime security landscape.
A Game-Changing Defence Procurement
The decision to procure these submarines is not merely about hardware; it represents a transformative shift in Canada’s defence strategy. For decades, the Royal Canadian Navy has operated a limited fleet, relying on second-hand submarines. The upcoming acquisition is expected to provide Canada with the unprecedented capacity to monitor and protect its coastal waters effectively. Previously, the Prime Minister indicated a June deadline for the announcement, but specifics remained elusive until now.
Sources with knowledge of the situation, who spoke on the condition of anonymity, suggest that the Prime Minister will name a preferred bidder before heading to the NATO leaders’ summit in Turkey. While this announcement is significant, it is important to note that it may not immediately result in a signed contract. Instead, ongoing negotiations will likely shape the final agreement over the next few years, as highlighted by defence expert Philippe Lagassé from Carleton University.
Economic Stakes and Industrial Benefits
The financial ramifications of this procurement are staggering, with the total value of the submarine project estimated between £20 billion and £30 billion, while operations, maintenance, and upgrades could push that figure to £40 billion or even £50 billion. The government’s approach has been to weigh not just the submarines’ technical specifications but also the economic benefits that both bidders can provide to Canada.
Hanwha has made a compelling offer, promising over £70 billion in trade and investment, alongside the prospect of more than 25,000 jobs annually from 2026 to 2044. Conversely, TKMS has claimed its partnership with Norway could inject £86 billion into Canada’s economy, creating approximately 650,000 job years over the contract’s lifespan.
The Shift in Military Dynamics
Historically, Canada has not invested in new submarines since the 1960s, during the height of the Cold War. The current reliance on a fleet of four second-hand submarines, of which only one is usually operational, underscores the pressing need for a robust underwater presence. Defence officials argue that to effectively safeguard national interests, Canada requires a fleet of twelve submarines, allowing for three vessels to be operational at any given time.
David Perry, president of the Canadian Global Affairs Institute, emphasised that this procurement would significantly enhance Canada’s situational awareness in its coastal waters. “It will give us much more of an ability to independently know what’s happening around our own Canadian coastal waters,” Perry noted, illustrating the strategic implications of this decision.
The Contest Heats Up
Since August 2025, Hanwha and TKMS have engaged in a vigorous campaign to secure Ottawa’s favour. This competition has been marked by heightened visibility and aggressive public diplomacy, with both bidders showcasing their technologies and pledging substantial industrial benefits. Hanwha, for instance, has committed to investing $200 million to aid Ontario’s Algoma Steel in constructing a steel mill, contingent on winning the contract.
The German bid has also sought to highlight TKMS’s longstanding relationship with Canada, reinforced by NATO ties and their history of delivering submarines globally. Tjorven Bellmann, the German ambassador to Canada, asserted that a partnership among Canada, Germany, and Norway could yield the most modern and low-risk submarine fleet.
The Unique Nature of This Bid
This procurement process is distinct from previous military acquisition competitions, such as the recent fighter jet selection. Notably, there is no U.S. defence contractor involved, as the Canadian government opted against nuclear submarines, and the U.S. does not manufacture conventional diesel-electric models. This absence means less pressure from Canada’s most powerful ally in determining a winning bidder.
South Korea, keen to establish itself as a formidable player in the global defence market, has invested heavily in its bid, aiming for a significant breakthrough in Canada. Should Hanwha emerge victorious, it would mark a historic moment, being the first time Canada has procured a major military platform from a non-Western supplier.
Why it Matters
This submarine acquisition is poised to not only enhance Canada’s military capabilities but also reshape its defence industrial landscape. The outcome will have profound implications for Canada’s national security strategy, economic development, and international partnerships. As the decision looms, the stakes could not be higher—both for the bidders and for Canada’s future as a maritime power.
