Canada is expected to enter into exclusive talks with Germany's Thyssenkrupp Marine Systems (TKMS) to build a new fleet of conventional submarines, in one of the largest military procurements in the country's history. The deal, reported by the Globe and Mail, could be worth more than $100 billion over decades, including support and maintenance costs.
Decision announced ahead of NATO summit
Prime Minister Mark Carney is expected to announce the selection of TKMS later today en route to the North Atlantic Treaty Organization summit in Turkey, according to a person familiar with the process who asked not to be named because the talks are confidential. The German government expressed confidence that Carney would choose the "unbeatable" TKMS offer, a German official told reporters in Berlin.
The decision ends a year-long competition between TKMS and South Korea's Hanwha Ocean Co., which had mounted an extensive advertising campaign in Canada. Both finalists pledged billions in spinoff industrial benefits for Canada, spanning artificial intelligence, steel manufacturing, space technologies, and advanced defence systems.
Strategic implications for Arctic security
Canada urgently needs a new fleet of conventional submarines capable of operating under ice to patrol its enormous coastlines, particularly in the Arctic, as Russian and Chinese activity in the region increases. Canada's aging Victoria-class submarines are set to retire in the mid-2030s, and Carney has said only one is currently seaworthy.
The selection of TKMS aligns with Carney's push to deepen ties with Europe as the United States takes a more skeptical attitude toward NATO. He has described Canada as "the most European of non-European countries" and pursued closer integration with European defence initiatives.
Market reaction and industrial impact
TKMS shares rose as much as 13 per cent in Frankfurt, hitting the highest level since March 11. The decision marks a second major win for TKMS within days: the German government last week scrapped a troubled frigate order that rival Rheimetall had hoped to secure, instead awarding TKMS a contract to build up to eight smaller battle ships for nearly 12 billion euros.
It is a major disappointment for Hanwha, which had previously exported submarines only to Indonesia. Securing a foothold in a NATO market would have been a significant win for South Korea's shipbuilding industry.
TKMS said it was waiting for an official announcement from the Canadian government, while Hanwha did not immediately respond to requests for comment.
