• TKMS has been selected by Canada to build up to 12 new submarines, beating out South Korea’s Hanwha Ocean in a high-stakes competition.
  • The deal includes a broad investment package covering rare earths, AI, and battery manufacturing, with offset commitments spanning decades.
  • The decision marks a major step in Canada’s efforts to modernize its submarine fleet and strengthen Arctic sovereignty.

A High-Stakes Contest

Canada has chosen ThyssenKrupp Marine Systems (TKMS) to build its next-generation submarine fleet, according to people familiar with the matter. The decision, reported by the Globe and Mail, ends a fierce bidding war that pitted the German shipbuilder against South Korea’s Hanwha Ocean. The contract, valued at up to C$60 billion, will see the delivery of up to 12 submarines to replace the aging Victoria-class boats.

TKMS’s bid went beyond just building submarines. The company has proposed an expansive investment package that includes partnerships in critical minerals, artificial intelligence, and battery manufacturing, aiming to secure long-term industrial benefits for Canada. “We offered not just submarines, but a comprehensive economic partnership,” a TKMS spokesperson said, declining to elaborate on specific commitments.

Strategic and Economic Implications

The submarine program is central to Canada’s Arctic defense strategy, with Ottawa emphasizing the need for vessels capable of operating under ice. The new submarines, based on TKMS’s Type 212CD design, are expected to meet those requirements. “This acquisition is about sovereignty and security,” a Canadian defense official told reporters, speaking on condition of anonymity because the decision is not yet public.

The deal also carries significant economic weight. TKMS’s offset package—including potential domestic assembly at Canadian shipyards—could generate thousands of jobs and boost local supply chains. The company has been in discussions with provincial governments and industry groups to finalize the investment framework, according to people close to the talks.

Hanwha Ocean had aggressively pitched its own bid, emphasizing its ability to deliver submarines faster and at lower cost. But Canada’s focus on industrial offsets and long-term strategic alignment with NATO allies appears to have tipped the scales in favor of TKMS. Germany’s government actively supported TKMS’s bid, reflecting deepening defense ties between Berlin and Ottawa.

Next Steps

The formal announcement is expected in the coming weeks, with a contract signing likely later this year. Deliveries are projected to begin in the mid-2030s, with the last submarine entering service around 2050. TKMS will now enter exclusive negotiations with Canada’s Public Services and Procurement Department to finalize terms.

Correction: An earlier version of this article misstated the value of the contract. It is up to C$60 billion, not C$12 billion.