The contest for supplying Canada with its next fleet of submarines has intensified, with the competition recently narrowed to two finalists: a South Korean company, Hanwha Oceans, and Germany’s ThyssenKrupp Marine Systems (TKMS). Central to this procurement drive is Canada’s urgent need to replace its aging Victoria-class submarines, which were initially purchased second-hand from the U.K. in 1998. Prime Minister Mark Carney has highlighted that Canada currently has only one operational submarine, emphasizing the urgency to secure new vessels by 2035, when the current fleet is expected to be fully decommissioned. As countries around the world also recognize the need for submarine capabilities, Canada risks getting pushed to the back of the line if it delays its purchasing decisions. This urgent procurement was underscored by previous Prime Minister Justin Trudeau’s announcement at the NATO summit in Washington in 2024, amid increased pressure on Canada to enhance its defense spending.
Carney’s announcement on August 25 in Berlin marked a significant step in the procurement process. The spotlight is on Hanwha Oceans, which produces the KSS-III submarine renowned for its lithium-ion battery technology, and is eager to establish itself as a leading global defense supplier. Hanwha has committed to delivering its first submarine by 2032 and aims to provide a total of four submarines by 2035. However, the company has not yet delivered these submarines to any other nation. On the other hand, TKMS proposes its new 212CD submarines, which use hydrogen fuel cells and diesel engines, presenting a product that is already familiar to NATO allies who operate the 212A model. TKMS claims they can meet Canada’s tight deadlines, positioning the country advantageously among existing orders with nations like Germany and Norway.
As Canada assesses its submarine requirements, key priorities include stealth capabilities and lethality. The Royal Canadian Navy’s recent strategic updates have emphasized the importance of arctic security as Russia expands its military presence in the region. Canada seeks submarines capable of operating under ice, which would enable prolonged missions across all three coasts, particularly in challenging conditions. Carney noted the necessity of year-round operational capabilities in various maritime environments. Additionally, there is a push for economic benefits from this procurement; Hanwha has proposed developing maintenance facilities on both coasts, while TKMS aims to collaborate with various Canadian shipyards.
The financial implications of this procurement project are immense, potentially becoming one of the largest defense initiatives in decades, though specific cost estimates remain undisclosed. The Canadian government has not provided a clear price ceiling for the submarine acquisitions, leaving it open for negotiations with suppliers. Looking to learn from past procurement issues—such as the recent exorbitant costs incurred from the F-35 stealth jet project—Canada aims to proceed with caution and deliberation in its negotiations. While there were discussions around considering nuclear submarines, which would entail significantly higher costs and complexities, Canada appears to be leaning toward conventional options given the practical challenges surrounding nuclear capabilities.
Moving forward, Ottawa’s next steps involve engaging in detailed negotiations with both Hanwha Oceans and TKMS. The government faces a critical decision on whether to issue a formal request for proposal or to negotiate directly with the shortlisted companies. Vice-Admiral Angus Topshee of the Royal Canadian Navy has indicated a potential timeline for a decision by year-end, provided Canada moves decisively through the procurement process. The urgency and complexity of this initiative underscore the broader strategic need for Canada to bolster its naval capabilities in response to evolving global security dynamics and the pressing need for enhanced defense readiness. As the situation develops, Canada’s submarine procurement strategy represents a crucial component of its defense policy and maritime strategy in the years to come.
