South Korean Defense Firm Presents Comprehensive Industrial Benefits Package for Canadian Submarine Contract
A South Korean defense corporation competing for Canada's multi-billion dollar submarine procurement program has revealed a substantial industrial benefits package that includes strategic alliances with several prominent Canadian companies. Hanwha Ocean announced on Monday that it has signed multiple memorandums of understanding with Canadian firms including Algoma Steel, Telesat, MDA Space, Cohere, and PV Labs to establish an industrial cooperation network directly linked to the submarine deal.
High-Level South Korean Delegation Arrives in Ottawa
The announcement coincides with the arrival of a high-level South Korean government delegation in Ottawa on Tuesday to discuss trade, submarine procurement, and broader defense issues. The delegation includes senior government officials alongside executives from Hanwha Ocean Co., HD Hyundai Heavy Industries Co., and Hyundai Motor Group. These discussions come at a critical juncture as Canada prepares to make a final decision on one of its largest military acquisitions in decades.
Canada's Massive Submarine Procurement Program
The Liberal government is preparing to spend tens of billions of dollars—with some estimates reaching as high as $100 billion—on a new fleet of submarines for the Royal Canadian Navy. Canada expects to acquire up to twelve conventionally powered, under-ice capable submarines, and Prime Minister Mark Carney has emphasized the urgency of moving forward with this acquisition. Government officials anticipate that a contract could be finalized by the end of this year.
Competition Between Two Major Defense Contractors
In late August 2025, the Liberal government announced it had narrowed its choices to two submarine builders: Germany's ThyssenKrupp Marine Systems (TKMS) and South Korea's Hanwha Ocean. Hanwha is offering Canada its KSS-III submarine, while TKMS proposes providing the Type 212CD submarine. Senior Royal Canadian Navy officers have concluded that both submarines meet Canada's operational requirements, with Carney stating in September that "both of them fulfil the requirements, the very high requirements for the Canadian Navy."
Industrial Benefits Become Decisive Factor
With both submarines meeting technical specifications, the federal government is placing significant emphasis on industrial benefits as a determining factor in selecting the winning contractor. These benefits span multiple sectors including aerospace and automotive industries. The agreements Hanwha has established with Canadian companies are contingent upon the firm winning the submarine contract, creating substantial economic incentives for Canada regardless of which company ultimately secures the deal.
Strategic Partnerships with Canadian Technology Firms
As part of Monday's announcement, Hanwha and Ottawa-based Telesat signed a memorandum of understanding to jointly collaborate on next-generation sovereign satellite connectivity solutions. The partnership will also develop user terminals compatible with Telesat's Low Earth Orbit (LEO) network, representing a significant technological advancement for Canada's defense and communications infrastructure.
German Competitor Also Preparing Benefits Package
TKMS CEO Oliver Burkhard recently told Reuters that the German company is in discussions with Norwegian and German companies and plans to offer its own multi-billion-dollar investment package to Canada in an effort to win the submarine tender. This competitive dynamic ensures that Canada will receive substantial industrial benefits regardless of which contractor is selected, though the specific nature and distribution of these benefits will vary between the two proposals.
The submarine procurement represents one of Canada's most significant defense investments in recent history, with implications for national security, industrial development, and international trade relationships. As both finalists prepare their final offers, the emphasis on industrial benefits highlights how major defense contracts increasingly serve as catalysts for broader economic development and technological advancement.
