SEOUL, July 07 (AJP) — Shares of Hanwha Ocean plunged Tuesday after the South Korean shipbuilder failed to secure preferred bidder status for Canada's next-generation submarine procurement program, dashing investor hopes of winning one of the world's largest submarine export deals.
The stock was trading at 89,900 won as of 9:50 a.m., down 22.57 percent from the previous session after triggering a volatility curb shortly after the market opened. Shares of HD Hyundai Heavy Industries, which partnered with Hanwha Ocean in the bid, also fell 3.95 percent to 560,000 won.
Canadian Prime Minister Mark Carney announced Monday (local time) that Germany's Thyssenkrupp Marine Systems (TKMS) had been selected as the preferred bidder for the Canadian Patrol Submarine Project (CPSP), a program valued at about 60 trillion won ($43.6 billion) including procurement and 30 years of maintenance, repair and overhaul (MRO) services.
Under the project, Canada plans to replace its four aging submarines with up to 12 new diesel-electric submarines by the mid-2030s.
The Korean shipbuilder had promoted its 3,000-ton KSS-III submarine by highlighting its ability to deliver vessels on a relatively short timeline while offering long-term industrial cooperation and local MRO infrastructure in Canada. TKMS, however, strengthened its competing proposal by offering to prioritize Canadian deliveries ahead of submarines already scheduled for Germany and Norway.
The South Korean shipbuilder had pitched its 3,000-ton KSS-III submarine, highlighting faster delivery, local MRO capabilities and broader industrial cooperation with Canada. TKMS, meanwhile, offered to prioritize Canadian deliveries ahead of submarines already scheduled for Germany and Norway.
Industry analysts said the two finalists had been viewed as broadly comparable on technology and delivery capability, with geopolitical considerations ultimately tipping the balance.
In a statement, Hanwha Ocean said it was disappointed by the outcome despite making every effort, adding that it had been unable to overcome "the NATO alliance barrier."
The company said it accepts the result as its own shortcoming and remains committed to pursuing opportunities in the global naval defense market.
"We will closely examine the challenges revealed through this competition, come up with clear solutions, and find a way for Korea's naval defense industry to make a greater leap in the global market," the company said.
HD Hyundai Heavy Industries also struck an optimistic tone.
"Although we are disappointed that our efforts did not result in success, the experience of competing as one Team Korea will serve as a solid stepping stone for K-defense to make a significant leap forward," the company said.
Hanwha Ocean stands as the "reserve" supplier should negotiations between Ottawa and the German team that could take "six to 18 months" falter.
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