Canada has selected German shipbuilder TKMS to build a new fleet of submarines, marking the country’s largest defense procurement to date. Prime Minister Mark Carney announced the decision on July 6 in Halifax, Nova Scotia, confirming that the German company had defeated South Korea’s Hanwha Ocean in a closely watched international competition.

The selection clears the way for negotiations on a contract expected to be finalized by the end of the year. TKMS will supply its Type 212CD submarines, a design already under construction for Germany and Norway. The vessels will replace the Royal Canadian Navy’s aging Victoria-class submarines, with the first delivery planned for 2033.

While Carney did not disclose the contract value, the full program is estimated to reach about $70 billion (CAD 100 billion) over its lifetime. That figure includes submarine construction, maintenance, infrastructure, weapons, and long-term support.

New fleet to replace aging submarines

The new submarines are expected to modernize Canada’s underwater abilities as the current Victoria-class fleet approaches retirement in the mid-2030s. Officials said the first submarine is set to arrive in 2033, with three more expected the following year.

Measuring about 240 feet (73 meters) in length and displacing approximately 3,307 U.S. tons, the vessel is designed for longer deployments, with greater mission payload capacity and improved onboard living conditions for crews operating on extended missions.

TKMS secured the project over Hanwha Ocean, which had proposed its KSS-III submarine. “This was a difficult, close decision between two highly qualified suppliers,” Carney said in making the announcement in Halifax, Nova Scotia. “Both the TKMS and the Hanwha platforms met the very high capabilities of the Royal Canadian Navy, and both of them put forward strong proposals to maximize benefits for Canadian workers and businesses.”

“In the end, this decision was about choosing the absolute best platform and partnership to meet Canada’s combined strategic, security and economic interests,” Carney said.

Procurement supports NATO goals and industry

The announcement came one day before the NATO Summit in Turkey. Canada currently spends 2.1 percent of its GDP on defense and has pledged to raise that figure to 5 percent by 2035. Carney said the submarine program would strengthen Canada’s military while creating new opportunities for domestic industry.

“These subs will strengthen our defense industrial base, they will deepen our partnerships with trusted allies, and they will open new opportunities for Canadian businesses in European supply chains,” he added.

TKMS CEO Oliver Burkhard welcomed the decision and said the company is ready to work closely with Canada and its international partners.

“We stand ready to work alongside the government of Canada, Canadian industry and our partners in Germany and Norway to deliver a world-class submarine capability that will strengthen security, create economic opportunity and generate lasting benefits for future generations,” Burkhard said.

Hanwha vows to expand Canadian ties

Hanwha Canada said it was disappointed with the result but said the competition showed the strength of South Korea’s defense industry.

“The team at Hanwha have demonstrated to the Canadian public and government that there is unlimited potential to unlock within the South Korean defense industrial base and that Hanwha and its business divisions will continue to grow aside from today’s decision,” Copeland said in a statement. “We look forward to continuing to demonstrate why Hanwha is the backbone of the world’s fourth-largest defense export nation.”

Hanwha ran a major campaign during the competition. In May, the Republic of Korea Navy sent a KSS-III submarine to Victoria, British Columbia, to demonstrate its long-range capabilities and to take part in joint operations with the Royal Canadian Navy. The company also promoted the project as a way to boost Canada’s role in the Indo-Pacific.

Carney said Canada’s decision would not affect its regional strategy. “We’re very committed to the Indo-Pacific strategy,” he said. “There are a series of other initiatives Canada and Korea are pursuing that build our economic resilience and security footprint.”

Record procurement completed in under a year

Stephen Fuhr, Canada’s secretary of state for defense procurement, said on July 6 that the submarine competition was completed in less than a year, making it one of the fastest major defense purchases in Canadian history.

Fuhr acknowledged that Canada’s procurement system is often criticized for being slow. He said the submarine program shows that future purchases can happen faster, and speeding up defense buying is still one of his main goals. The government expects the new submarines to enter service as the Victoria-class fleet is retired in the mid-2030s.