August 26, 2025 – In a significant development for Canada’s defense modernization efforts, Prime Minister Mark Carney visited the ThyssenKrupp Marine Systems (TKMS) shipyard in Kiel, Germany. The trip, part of a broader diplomatic engagement with German Chancellor Friedrich Merz, comes amid Ottawa’s announcement of advancing the Canadian Patrol Submarine Project (CPSP) by identifying two qualified suppliers for the procurement process.
Carney’s tour highlights the intensifying competition between Germany and South Korea to equip the Royal Canadian Navy (RCN) with up to 12 new conventionally powered submarines, aimed at replacing the aging Victoria-class fleet by the mid-2030s.
The visit underscores Canada’s strategic push to bolster its underwater capabilities in an era of heightened geopolitical tensions, particularly in the Arctic and Indo-Pacific regions. As the world’s second-largest country by landmass and the one with the longest coastline, Canada views submarines as essential for sovereignty protection, maritime surveillance, and NATO contributions. The procurement, part of the government’s “Our North, Strong and Free” defense policy update from April 2024, is estimated to cost between $20 billion and $60 billion CAD, depending on final specifications and economic offsets.
Background: The Need for New Submarines
The CPSP was established in 2021 to inform timely governmental decisions about replacing the current submarine fleet and avoid capability gaps.
Canada’s current submarine fleet consists of four Victoria-class vessels, acquired second-hand from the Royal Navy (United Kingdom) in 1998 and accepted into service between 2000 and 2003, with the fourth delayed until 2015 due to a fire in transit in 2004.
These diesel-electric submarines have been plagued by maintenance issues, limited operational availability, and outdated technology. The RCN has set a firm deadline of no later than 2035 for the delivery of the first replacement submarine, with the full fleet of up to 12 boats needed to ensure persistent deterrence across Canada’s three oceans. The current fleet will remain operational into the mid-to-late 2030s, but the new submarines must provide extended range and endurance, stealth, persistence, and lethality. They will be deployable in the Arctic and capable of detecting, tracking, deterring, and defeating adversaries in all three oceans, while enabling international security contributions through deployments with allies and partners.
The project will also create opportunities for Canada’s marine and defence sectors.
Public Works and Procurement Minister Joël Lightbound announced the shortlist on August 26, 2025, in Gatineau, Quebec, emphasizing that the decision was based on a “thorough assessment of Canada’s submarine requirements, including construction and delivery timelines.”
Initial respondents to the Request for Information (RFI) issued in September 2024 included companies from France, South Korea, Spain, Sweden, Germany, and Norway. However, after evaluation, the field has been narrowed to two finalists: Germany’s TKMS and South Korea’s Hanwha Ocean Co., Ltd. (Hanwha). Canada will now conduct in-depth engagements with these suppliers to advance the procurement process.
Carney’s Visit to TKMS: A “Strategic Partnership” Pitch
Prime Minister Carney’s itinerary in Germany included a morning meeting with Chancellor Merz at the Chancellery in Berlin, followed by an afternoon tour of the TKMS facility in Kiel, a northern port city renowned for its shipbuilding expertise. The visit was at Merz’s urging, who described it as vital for “Transatlantic security” and strengthening NATO’s northern flank.
TKMS, a leading European defense contractor, is pitching its Type 212CD submarine—a variant of the proven Type 212A design already in service with the German and Italian navies. The 212CD, developed jointly with Norway, measures 73 meters in length, displaces 2,800 tonnes when submerged, and features four torpedo tubes. It incorporates hydrogen fuel cell AIP technology, allowing for stealthy, extended underwater endurance ideal for Arctic patrols. Six units are currently under construction for Germany and Norway, with deliveries starting in 2028.
TKMS CEO Oliver Burkhard has repeatedly framed the bid as a “strategic partnership,” emphasizing integration into an existing production line. If selected, Canada could potentially receive its first boat as early as 2032-2033 by reallocating a slot from the German or Norwegian orders. The proposal also includes building a maintenance facility in Canada, creating jobs and ensuring long-term economic benefits—a key Liberal government priority under the Industrial and Technological Benefits (ITB) policy.
During the tour, Carney highlighted the demanding nature of Canadian operations: “Submarine means weeks under the sea ice, as well as in the Pacific… We need year-round fleets on all three coasts under quite demanding conditions.” He committed to a “fair and transparent competition,” but federal officials indicated internal debates on whether to request full proposals from both bidders or proceed directly to negotiations with a preferred partner.
The German bid aligns with a trilateral security pact signed in 2024 between Canada, Germany, and Norway, focusing on North Atlantic and Arctic cooperation. This partnership, akin to but less ambitious than the U.S.-UK-Australia AUKUS pact, could facilitate technology sharing and joint exercises, enhancing interoperability within NATO.
Minister Lightbound noted, “Diversifying our trade partnerships is crucial to ensuring Canada meets the moment as global circumstances evolve. The Canadian Patrol Submarine Project, in collaboration with TKMS and Hanwha as the 2 qualified suppliers, is an opportunity to work with allies and strengthen our defence industrial capacity.”
Secretary of State (Defence Procurement) Stephen Fuhr added, “Identifying TKMS and Hanwha as the qualified suppliers marks an important step toward the procurement of this critical capability.”
Minister of National Defence David J. McGuinty stated, “Today, Canada takes another step toward acquiring next-generation submarines for the Royal Canadian Navy. This is about defending our sovereignty, protecting Canadians, and ensuring our Armed Forces have the tools they need.”
Minister of Industry Mélanie Joly emphasized, “This generational project will strengthen our economy, create well-paying jobs and build a more secure, resilient Canada,” highlighting that the project will meet ITB requirements and support the forthcoming Defence Industrial Strategy.
South Korea’s Competing Bid: Speed, Innovation, and Diversification
While Carney toured Kiel, the other finalist—South Korea’s Hanwha Ocean—awaits a planned visit from the Prime Minister in October 2025. Hanwha submitted a detailed bid in March 2025, valued at $20-24 billion CAD. The proposal centers on the KSS-III (also known as the Dosan Ahn Chang-ho-class), a 3,000-tonne diesel-electric submarine powered by advanced lithium-ion batteries developed by Samsung SDI.
The KSS-III offers superior submerged endurance (over 21 days), a range of 10,000 nautical miles, and speeds up to 20 knots underwater. It can fire torpedoes and submarine-launched ballistic missiles, with a combat management system entirely designed in South Korea—addressing Canadian concerns over U.S. technological dependencies in other procurements like the F-35 jets. The boat’s automation allows operation with a crew of just 33 (expandable to 50), supporting mixed-gender teams across three decks.
South Korea promises delivery of the first four submarines by 2035, meeting the RCN’s deadline, and includes plans for Canadian maintenance facilities on both coasts. The bid also extends to army equipment, such as K9 howitzers and rocket systems, positioning Seoul as a comprehensive supplier. Hanwha officials claim the KSS-III’s Arctic suitability and NATO compatibility make it a “perfect fit,” with three units already in service in the Republic of Korea Navy.
This aggressive pitch comes as Canada seeks to diversify away from U.S. suppliers amid strained relations under President Donald Trump, including tariff threats and annexation rhetoric. South Korea, a U.S. ally with booming defense exports (reaching $17 billion in 2024), offers NATO-interoperable gear without the same export restrictions. Recent deals with Poland ($10 billion) and Romania ($1 billion) demonstrate Seoul’s reliability and speed.
The Pending Decision: Balancing Alliances, Costs, and Capabilities
With the shortlist announced on August 26, 2025, Canada faces a pivotal choice by 2027-2028.
The German option emphasizes deep NATO integration and a “family” of allies, potentially accelerating delivery through existing production. South Korea counters with faster timelines, innovative battery tech, and economic incentives, appealing to Canada’s diversification goals.
Key factors include:
- Technical Fit: Both meet under-ice and long-range needs, but the 212CD’s fuel cells vs. KSS-III’s lithium-ion batteries offer different endurance profiles.
- Economic Returns: Mandatory ITB requires 100% offset, favoring bids with Canadian job creation, and aligning with the forthcoming Defence Industrial Strategy.
- Geopolitics: Germany strengthens European ties; South Korea bolsters Indo-Pacific partnerships against China.
- Cost and Timeline: Estimates vary, but South Korea’s unsolicited bid promises quicker, potentially cheaper delivery, with the first submarine no later than 2035 to avoid gaps.
Critics, including opposition Conservatives, urge haste to meet NATO’s 2% GDP spending target, while procurement delays in past projects (e.g., F-35 saga) loom large.
Vice-Admiral Angus Topshee, RCN commander, has stressed the urgency: “The world has changed, and now we need submarines to actually defend Canada.”
As Prime Minister Carney prepares for his South Korean visit, the decision will shape Canada’s naval future and alliances. Whether opting for a European “family” or an Asian innovator, the outcome promises to modernize the RCN while navigating a volatile global landscape.
