Prime Minister Mark Carney announced the choice that involved heavily government-backed competition between Germany and South Korea in Halifax, Nova Scotia, shortly before departing for a NATO leaders’ summit in Türkiye.
“I’m pleased to announce that Canada has selected TKMS as the preferred supplier for Canada’s patrol submarines,” Carney said.
South Korea’s Hanwha Ocean was designated as the reserve supplier and could be invited into negotiations if Canada fails to reach an agreement with TKMS.
“We don’t expect that, but if they are unsuccessful, Canada retains the right to designate Hanwha Ocean, currently the reserve supplier, as the preferred supplier and enter into negotiations with them,” Carney said.
He described the selection as a “difficult, close decision between two highly qualified suppliers,” saying both proposed submarines met the Royal Canadian Navy’s demanding capability requirements and were backed by strong industrial packages.
He had a long discussion with South Korean President Lee Jae Myung over the weekend including the decision as he "understood the disappointment" of Seoul, but the two agreed to pick up other technologically complimentary areas when they meet at the NATO summit as Canada maintains Korea as a critical strategic partner.
“In the end, this decision was about choosing the absolute best platform and partnership to meet Canada’s combined strategic, security and economic interests,” he said.
The announcement does not immediately award TKMS a final contract. Ottawa will now enter detailed negotiations with the German shipbuilder over pricing, delivery, Canadian industrial participation, infrastructure, training and long-term maintenance that could take six to 18 m months if not longer, Carney said, declining to specify the amount of the deal as not "prejudice" the negotiations.
He said the negotiations would remain commercially sensitive and that the government would not conduct them publicly in order to preserve Canada’s bargaining position.
He said funding for the submarines had already been included in Canada’s fiscal framework and described the acquisition as the largest procurement in Canadian history.
Canada has said it aims to award the final contract by 2028 and receive the first replacement submarine no later than 2035 to avoid a gap in its underwater capabilities.
The Canadian Patrol Submarine Project is intended to replace the Royal Canadian Navy’s four aging Victoria-class boats with up to 12 conventionally powered submarines capable of operating across the Arctic, Atlantic and Pacific oceans.
Canada identified TKMS and Hanwha Ocean as the project’s two qualified suppliers in August 2025 after assessing their designs, construction capacity and proposed delivery schedules.
TKMS has offered to adjust delivery slots within existing German and Norwegian orders, allowing the first four Canadian submarines to be delivered by 2034, according to Carney.
The outcome marks a major setback for Hanwha Ocean, which had mounted an extensive campaign emphasizing the KSS-III Batch-II’s long range, weapons capacity and faster delivery schedule.
Despite the decision, Carney stressed that South Korea remained an important strategic partner and thanked both bidders and their governments for what he called thoughtful, comprehensive and cooperative proposals.
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