– Canada is nearing a decision on a multi-billion dollar submarine contract, with South Korea intensifying its efforts to secure the deal. Ottawa is expected to finalize proposals and select a preferred bidder by the middle of this year for the Canadian Patrol Submarine Project (CPSP), a program estimated to be worth approximately $45 billion USD.
The competition pits South Korean shipbuilders against German firms, as both nations vie for a contract that will shape Canada’s undersea capabilities and industrial partnerships for decades to come. Government and industry officials in South Korea are mounting a concerted, all-out effort to win the project, according to sources familiar with the process.
The evaluation process for the CPSP will consider not only submarine performance, delivery timelines and cost, but also the extent to which the winning bidder contributes to Canadian industry. Ottawa is prioritizing increased local industrial participation, offset agreements, and a “Buy Canadian” approach to foster domestic economic benefits.
The Canadian government signaled its commitment to supporting domestic industry through a signing ceremony on , where government assurances were formalized to back Canadian shipbuilders. This move underscores a desire to establish long-term partnerships encompassing submarine construction, operation, maintenance, and technology transfer.
Officials have stated that the government, working with relevant ministries, is focused on solidifying industrial collaboration tasks and strengthening implementation management systems. The aim is to enhance international confidence in the fulfillment of proposed commitments and to promote broader international cooperation within the Korean defense and shipbuilding sectors.
South Korean companies are actively pursuing local partnerships to bolster their bids. Hanwha Ocean recently established cooperative agreements with Ontario shipbuilding firms and Mohawk College, aiming to strengthen the Canadian shipbuilding industry and develop a skilled workforce. The company also signed a memorandum of understanding with Algoma Steel, Canada’s largest steel producer, to explore the construction of a local steel plant and establish a supply chain for steel products used in submarine construction and maintenance.
Hanwha Ocean and Hanwha Systems have also entered into a three-way memorandum of understanding with Cohere, a Canadian artificial intelligence company, to jointly develop AI technologies applicable to all stages of shipbuilding and submarine system integration.
Hanwha Systems has further forged a partnership with Telesat, a Canadian satellite communications company, to collaborate on low Earth orbit satellite communications, aiming to develop a competitive “next-generation low Earth orbit satellite communication network” for both domestic and global markets.
HD Hyundai Heavy Industries, participating as part of a team, is leveraging its submarine overhaul capabilities to offer comprehensive consulting services to Canada, ensuring the stable operation and maintenance of the submarines. The company also plans to transfer submarine technology and shipbuilding expertise to Canadian shipyards, contributing to the enhancement of the Canadian shipbuilding industry. HD Hyundai Oilbank is exploring a potential agreement to import Canadian crude oil worth billions of dollars during the submarine project’s lifespan.
The CPSP involves the procurement of 12 3,000-ton diesel-electric submarines. The contract value is estimated at $20 billion, with the total project cost, including 30 years of maintenance, repair, and overhaul (MRO), potentially reaching $60 billion. Currently, the competition is between the Hanwha Ocean/HD Hyundai Heavy Industries consortium and Germany’s ThyssenKrupp Marine Systems (TKMS). Canada is expected to announce a preferred bidder in the first half of .
The intensifying competition reflects the broader geopolitical landscape, as nations seek to strengthen their naval capabilities and forge strategic partnerships. The outcome of the CPSP will not only determine Canada’s future submarine fleet but also signal the evolving dynamics of international defense cooperation and industrial collaboration.
