Korean Shipbuilders Advance to Final Round for Canadian Submarine Contract

Canada to Acquire 12 Submarines to Replace Victoria-Class Fleet
If Successful, the Largest Single Defense Export Contract in History
Presidential Special Envoy Visits Canada to Emphasize Cooperation

Hanwha Ocean and HD Hyundai Heavy Industries, who joined forces as a "one team" to compete for a Canadian submarine contract worth up to 60 trillion won, have been shortlisted for the final round along with a German company. The Canadian government is expected to select the final contractor as early as next year after conducting additional evaluations of the candidates.

The contract cost for acquiring the submarine alone is up to 20 trillion won, and including operation and maintenance costs over the next 30 years, the contract size is a massive submarine project that can increase up to 60 trillion won.

According to the defense industry on August 27, the Hanwha Ocean and HD Hyundai Heavy Industries consortium, acting as a "one team," was shortlisted for the "Canadian Patrol Submarine Project (CPSP)" along with Germany's Thyssenkrupp Marine Systems (TKMS). Leading European defense companies, including France's Naval Group, Spain's Navantia, and Sweden's Saab, also competed for the project, but only the Hanwha Ocean and HD Hyundai Heavy Industries consortium and Germany's TKMS secured a place in the finals.

Last year, in the Australian frigate project, the two companies competed separately and both failed to win. Learning from that experience, they formed a "one team" for this project and made it to the final candidates.

Canada to Acquire 12 Submarines to Replace Victoria-Class Fleet

This project aims to acquire up to 12 diesel submarines to replace the four Victoria-class submarines, which are scheduled to be retired in the mid-2030s. The contract cost for acquiring submarines alone amounts to up to 20 trillion won, and when including operation and maintenance costs over the next 30 years, the contract scale expands to as much as 60 trillion won, making it a mega submarine project. If successful, this would be the largest single defense export contract in history.

Korean defense companies have entered this bidding war as a "one team," with Hanwha Ocean leading the project and HD Hyundai Heavy Industries providing support, under the mediation of the Defense Acquisition Program Administration (DAPA).

The two leading domestic shipbuilders have fiercely competed in various naval vessel projects, such as the Korean Next-Generation Destroyer Project (KDDX), as order competition intensified with the expansion of the defense market. Recently, both companies also entered the Australian new frigate procurement project for 11 additional ships but lost to Japanese and German companies that formed a single team. At the time, the lack of a "Korea one team" and the resulting dispersion of government support were cited as disadvantages in the competition. Consequently, in February, under the initiative of DAPA, the two companies signed a memorandum of understanding (MOU) to cooperate as a "one team" for future naval vessel export projects.

If Successful, Largest Single Defense Export Contract in History

The core of the MOU is that, when participating in naval vessel export projects, the government and the shipbuilding industry form a "one team," with HD Hyundai Heavy Industries leading surface ship exports and Hanwha Ocean leading submarine exports, each supporting the other in their respective areas of strength. The current Canadian submarine bid is also being pursued as a single team, with Hanwha Ocean as the lead and HD Hyundai Heavy Industries providing support, based on this agreement.

Hanwha Ocean has proposed the 3,000-ton "Jangbogo-III Batch-II," which boasts the highest operational performance among diesel-electric submarines, for this project. Equipped with Air-Independent Propulsion (AIP) and lithium-ion batteries, it can operate underwater for more than three weeks and travel up to 7,000 nautical miles (about 12,900 kilometers). Additionally, its rapid delivery capability, proven submarine solutions, and localization strategies have reportedly been well received by the Royal Canadian Navy.

Presidential Special Envoy Visits Canada to Emphasize Cooperation

Meanwhile, the Korean government is also supporting the project by strengthening defense cooperation with Canada. In March, DAPA held the "3rd Korea-Canada Defense Logistics Joint Committee" in Canada and expressed its commitment to actively support the submarine project. Last month, a presidential special envoy visited Canada to emphasize collaboration on the submarine project. While the final contract for the Canadian submarine project is expected around 2028, there is a possibility that an early contract could be signed as soon as next year.

A government official stated, "We will continue to pursue comprehensive negotiations, including meetings with key Canadian figures, to ensure that Korea ultimately secures the Canadian submarine project, and we will work to foster favorable public opinion within Canada."