As Prime Minister Mark Carney prepares to unveil the results of a significant submarine procurement competition on Monday in Halifax, the stakes could not be higher. The contest, which pits South Korea’s Hanwha against Germany’s ThyssenKrupp Marine Systems (TKMS), is set to reshape the Royal Canadian Navy and bolster Canada’s maritime defence capabilities for decades to come. This announcement marks the culmination of a fierce bidding war for a contract that could be worth between £20 billion and £30 billion for the submarines alone, with total project costs potentially reaching £40 billion to £50 billion when factoring in operations, maintenance, and upgrades.
A Historic Opportunity
The upcoming decision will fundamentally alter Canada’s naval posture. For the first time in history, the Royal Canadian Navy could acquire a fleet of 12 modern submarines, significantly enhancing its ability to operate undetected in its coastal waters. Currently, Canada operates a mere four submarines, all of which were purchased used, with only one typically available for active duty. The military argues that to maintain a state of high readiness, it requires a fleet of 12, as only one out of every four submarines can be deployed while the others undergo maintenance or training.
“This procurement will enable us to maintain a greater awareness of activities in our coastal waters,” explains David Perry, president of the Canadian Global Affairs Institute. The submarines, whether from Hanwha’s KSS-III Batch-II or TKMS’s 212CD models, promise to act as stealthy deterrents against potential adversaries in Canada’s Arctic, Pacific, and Atlantic waters.
The Competitive Landscape
Both bidders have engaged in aggressive campaigns to win over Ottawa. Hanwha has pledged a staggering £70 billion in economic benefits, promising to create over 25,000 jobs annually between 2026 and 2044 if awarded the contract. On the other hand, TKMS, in collaboration with Norway, has projected an £86 billion boost to Canada’s GDP over the life of its proposal, which could generate approximately 650,000 job years of employment.
Despite speculation that Ottawa might consider splitting the contract between the two competitors, recent statements from government ministers have downplayed this possibility, indicating a preference for a singular award. The decision-making process has been influenced by the bidders’ commitments to industrial benefits, a crucial factor for the Canadian government, which is determined to bolster domestic capabilities amid growing U.S. protectionism.
The Broader Implications
The ramifications of this procurement extend beyond national security. Canada’s commitment to increasing defence spending to 5 per cent of GDP by 2035 aligns with NATO targets, a move that reflects the changing global security landscape. Notably, this procurement is unique as it does not involve any U.S. contractors, given Canada’s exclusion of nuclear submarines and the fact that the United States no longer manufactures conventional diesel-electric submarines.
This absence of American competition has allowed both Hanwha and TKMS to showcase their capabilities without external pressure from the U.S. defence industry. South Korea, in particular, views this contract as a critical opportunity to expand its military industrial base, aiming to establish itself as a leading global defence exporter.
Why it Matters
The outcome of this submarine procurement process is set to reverberate throughout Canada’s defence landscape, marking a significant transition in the country’s naval capabilities. If Hanwha secures the contract, it would represent a historic shift, as it would be the first instance of Canada procuring a major military asset from a non-Western supplier. This would not only signify a new chapter in Canada-South Korea relations but also reflect the growing importance of global defence partnerships in an increasingly multipolar world. As the announcement approaches, all eyes will be on Halifax, where the future of Canadian maritime defence will be determined.
