Canada Moves Towards Selecting South Korea for Submarine Project

South Korean Navy submarine Dosan Ahn Chang-ho and destroyer Daejeon conduct tactical maneuvers during joint exercises in Canadian waters on June 4-5, 2026. [Photo=Naval Forces] — South Korean Navy submarine Dosan Ahn Chang-ho (front) and destroyer Daejeon conduct tactical maneuvers during joint exercises in Canadian waters on June 4-5, 2026. [Photo=Naval Forces]

Multiple sources indicate that Canada is leaning towards selecting South Korea as the preferred bidder for its $60 billion next-generation submarine project. However, final negotiations are ongoing regarding whether to award the entire contract to South Korea or to split it with Germany.
According to officials, the Canadian government is seriously considering South Korea's proposal, but the final contracting method has not yet been confirmed.
A representative from South Korea's Ministry of Trade, Industry and Energy refrained from commenting on the negotiations but stated that the government is expecting "positive news."
A German submarine expert familiar with the negotiations noted, "Even if a split order is made, I understand that South Korea is likely to secure a larger share," adding that the announcement is being delayed due to ongoing detailed negotiations.
Another source told Aju Business Daily, "The current atmosphere is leaning towards South Korea, with the last issue being whether to award the entire contract to South Korea or to share it with Germany."
A different insider mentioned, "There is already talk of congratulatory messages circulating in the industry, indicating that South Korea's victory is seen as a foregone conclusion."
Canada was initially expected to announce its preferred bidder by the end of June, but the decision has now been pushed to early July. Discussions continue on whether to award up to 12 submarines included in the Canadian Patrol Submarine Project (CPSP) to a single company or to split the order between South Korea's Hanwha Ocean and Germany's ThyssenKrupp Marine Systems (TKMS).
The CPSP aims to replace Canada's aging Victoria-class submarines while enhancing underwater surveillance and deterrence capabilities in the Arctic, Atlantic, and Pacific regions in response to increased underwater military activities from Russia and China. Canada plans to acquire up to 12 conventional submarines, with the final candidates narrowed down to Hanwha Ocean's Changbogo-III Batch-II and TKMS's Type 212CD.
The Victoria-class submarines are expected to retire in the mid-2030s, necessitating the delivery of the first new submarines by 2035 to avoid a capability gap.
The German submarine expert highlighted the main differences between the two submarine types as their size and operational concepts.
Both models are conventional submarines equipped with diesel-electric propulsion systems and air-independent propulsion (AIP) systems. The Type 212CD is relatively smaller, has fewer crew members, and is optimized for long-duration submerged operations and stealth missions, excelling in detection avoidance and stealth capabilities.
In contrast, the Changbogo-III Batch-II is evaluated as having a longer operational range and a greater variety and scale of armaments, making it suitable for long-range patrol and strike missions. The expert explained that the Type 212CD is designed with NATO interoperability in mind, resulting in differences in maintenance methods and operational systems between the two platforms.

Steven Pure, Canada's Minister of Defence Procurement, fifth from left, visits Hanwha Ocean's Geoje facility on February 2, accompanied by Deputy Minister of Defence Lee Doo-hee, seventh from left, and Hanwha Ocean CEO Kim Hee-cheol, sixth from left, to inspect the lead ship of the Changbogo-III Batch-II proposed for the Canadian CPSP project. [Photo=Hanwha Ocean] — Steven Pure, Canada's Minister of Defence Procurement (fifth from left), visits Hanwha Ocean's Geoje facility on February 2, accompanied by Deputy Minister of Defence Lee Doo-hee (seventh from left) and Hanwha Ocean CEO Kim Hee-cheol (sixth from left), to inspect the lead ship of the Changbogo-III Batch-II proposed for the Canadian CPSP project. [Photo=Hanwha Ocean]

Canada has reiterated its intention to evaluate not only the performance of the submarines but also job creation, industrial investment, and extensive economic cooperation. As a result, this project has evolved beyond a simple bidding war between companies into a competition supported by the respective governments of South Korea and Germany.
During his visit to Hanwha Ocean's Geoje facility in February, Steven Pure identified the automotive industry as a potential area for collaboration that bidding countries could propose.
He stated, "Both South Korea and Germany are automobile manufacturing countries, and if there are possibilities for cooperation in this area, we want to expand it beyond defense to larger economic cooperation."
South Korea's main proposal involves Project Beaver, a $3.1 billion initiative utilizing Hyundai Motor's hydrogen vehicle technology. This plan includes constructing a liquefied hydrogen production facility in British Columbia, a hydrogen vehicle manufacturing plant in Ontario, and hydrogen refueling stations in British Columbia and Alberta, with the South Korean government estimating the project could create approximately 9,000 jobs.
Germany is emphasizing its advantage in NATO interoperability and the existing joint production system of the Type 212CD with Norway, which Canada could participate in.
Initially, Canada mentioned Volkswagen's $7 billion battery plant project in Ontario, suggesting that South Korea should make a corresponding automotive investment. However, Volkswagen later clarified that the battery investment was an independent project unrelated to defense procurement and denied any connection with TKMS.
The timing of the decision coincides with President Lee Jae-myung's first attendance at a NATO summit.
President Lee is expected to emphasize South Korea's role in the global defense supply chain and its rapid weapons production and supply capabilities at the NATO summit in Ankara, Turkey, on July 7-8.
An official from the Ministry of Trade, Industry and Energy drew a line between the president's attendance at the NATO summit and the Canadian submarine project, stating, "There are various reasons for attending the NATO summit, and it is too early to say that the submarine project is favorable for South Korea because of the president's attendance."
However, he noted that as NATO member countries seek to replenish depleted weapon stockpiles and reduce supply chain vulnerabilities, South Korea's defense production capabilities are becoming increasingly important.
He remarked, "While NATO must strengthen its own defense capabilities, the defense supply chain cannot be restored in a matter of months or even one to two years."
He added, "South Korea is emerging as an alternative due to its quick delivery, price competitiveness, and operational production lines, and recently has been referred to as the 'arsenal of the free world.'"
Canada's initiative to establish a multilateral Defence, Security and Resilience Bank (DSRB) is also emerging as a new variable in this competition.
Previously, Canada became the first non-European country to participate in the EU's €150 billion defense financing program, SAFE (Security Action for Europe), which has been interpreted as a favorable signal for Germany. Observers suggest that as Canada expands its defense cooperation with Europe, TKMS's Type 212CD may have a relative advantage.
However, as the deadline for announcing the preferred bidder approaches, Canada is accelerating its own multilateral defense financing system.
The DSRB, led by Canada, aims to provide up to £100 billion in low-interest funds to strengthen defense production and supply chains and security-related industries. Canada plans to reveal about ten founding participant countries at the NATO summit, with South Korea's potential participation also being discussed.
The chief negotiator from Canada described the negotiations with South Korea as "productive," estimating a "50-50" chance of South Korea participating as a founding member. In contrast, Germany is currently participating in discussions as an observer.
If South Korea secures the submarine contract, it could position itself as a long-term partner in Canada's defense manufacturing and financing network, encompassing shipbuilding, maintenance, supply chains, and advanced industrial cooperation, rather than merely a supplier of vessels.
This decision will shape not only what submarines Canada purchases but also the industrial and defense cooperation framework that will support the operation and maintenance of future submarine capabilities for decades to come.
David McGuinty, Canada's Minister of Defence, recently warned that operating two different types of submarines would require establishing separate maintenance, logistics, and training systems, increasing costs and complexity. However, he did not officially rule out the possibility of a split order.
Currently, the key issue is not whether South Korea will win the competition, but whether Canada will award the entire contract to South Korea or divide the order between South Korea and Germany, considering political and industrial balance.

* This article has been translated by AI.

Heesu Kim