As anticipation builds, Prime Minister Mark Carney is poised to announce the outcome of a significant competition for a contract to procure 12 submarines for the Royal Canadian Navy. The decision, expected to be revealed in Halifax on Monday, pits South Korea’s Hanwha against Germany’s ThyssenKrupp Marine Systems (TKMS) in a contest that could reshape Canada’s maritime defence capabilities for decades. This announcement comes just before Mr Carney departs for the NATO leaders’ summit in Turkey, marking a crucial moment in Canadian military procurement history.
The Stakes of the Submarine Contract
The submarine procurement is not just a matter of enhancing Canada’s naval fleet; it represents a strategic shift in the nation’s defence posture. With an estimated value between CAD 20 billion and CAD 30 billion for the submarines alone—and potential total costs for operations, maintenance, and upgrades reaching CAD 40 billion to CAD 50 billion—this contract embodies a monumental investment in Canada’s military infrastructure.
While the Prime Minister’s Office has remained tight-lipped regarding the specifics of the announcement, sources indicate that it will likely identify a preferred bidder rather than guaranteeing a signed contract immediately. Following this announcement, negotiations will proceed, which could extend for several years before finalising any deal.
The Contenders: Hanwha vs. TKMS
Both Hanwha’s KSS-III Batch-II submarine and TKMS’s 212CD model have been deemed suitable for Canadian needs. However, the decision will primarily hinge on the economic advantages each company can offer to Canada. Hanwha has made bold promises, including over CAD 70 billion in trade and investment and the creation of more than 25,000 jobs annually between 2026 and 2044. In contrast, TKMS, in partnership with Norway, asserts that its bid could add CAD 86 billion to Canada’s GDP and generate over 650,000 job years throughout the contract’s duration.
Despite initial speculation about splitting the contract between the two bidders, government officials have downplayed this possibility in recent months. The outcome will undoubtedly be transformative, giving Canada its first substantial underwater combat capability since the Cold War, as the nation has not ordered new submarines since the 1960s.
A Shift in Defence Industry Dynamics
The impending decision is expected to significantly bolster Canada’s military presence in the Arctic, Pacific, and Atlantic waters. Currently, the Royal Canadian Navy operates four second-hand submarines, with only one typically operational at any given time. The proposed acquisition will enhance Canada’s capability to monitor its coastal waters and deter potential threats.
David Perry, president of the Canadian Global Affairs Institute, articulated the importance of this procurement, stating, “It will give us much more of an ability to independently know what’s happening around our own Canadian coastal waters.” This heightened awareness is critical as geopolitical tensions rise globally.
The competition between Hanwha and TKMS has been fierce. Both companies have launched extensive campaigns to secure the contract, with Hanwha’s efforts being particularly visible. They even dispatched a submarine to Canada to showcase their technology, a move that signifies the seriousness with which South Korea approaches this bid.
The Implications for Canada’s Defence Future
The forthcoming announcement is particularly significant against the backdrop of Canada’s commitment to increase defence spending to 5 per cent of GDP by 2035, in alignment with NATO targets. This procurement process reflects a broader strategy to enhance Canada’s military capabilities, aiming to address contemporary security challenges.
Moreover, the decision to award such a pivotal contract to a non-Western supplier would mark a notable shift in Canada’s defence procurement strategy, highlighting the growing importance of diversifying military partnerships. If Hanwha emerges victorious, it would not only signify a breakthrough for South Korea’s defence industry but also reshape the landscape of Canadian military procurement.
Why it Matters
The outcome of this submarine procurement will reverberate through Canada’s military and industrial landscape, potentially redefining defence partnerships and strategies in an increasingly complex global security environment. By bolstering its naval capabilities, Canada aims to enhance its sovereignty and security, particularly in vulnerable maritime zones. This decision will not only affect military readiness but also economic prospects, job creation, and the future of defence procurement practices in Canada, setting a precedent for collaborations with non-traditional allies in the defence sector.
