GEOJE — Prime Minister Mark Carney toured a South Korean submarine on Thursday during a visit to the shipyards of Hanwha Ocean, one of two companies vying to build Canada’s next fleet of submarines.
Carney was joined by Defence Minister David McGuinty and Vice-Admiral Angus Topshee, Commander of the Royal Canadian Navy, along with South Korean Prime Minister Kim Min-Seok.
Hanwha officials also showed off their production facility, which features automated welding by robots.
Canada plans to buy up to 12 new submarines to replace the navy’s aging Victoria-class fleet, as part of an effort to bolster the military’s presence in the Arctic.
The South Koreans are pitching the submarine contract as the start of a wider industrial partnership between the two countries. Representatives from the embassy in Ottawa noted at an event last week that South Korea is now the number two supplier of military equipment to NATO countries, behind the United States.
During a bilateral meeting with South Korean President Lee Jae-Myung earlier on Thursday, Carney and Lee both talked about the importance of deepening the defence co-operation.
Carney had toured a rival submarine facility on Aug. 26 in Kiel, Germany, the day he announced the two finalist bidders: Hanwha and Germany’s ThyssenKrupp Marine Systems, or TKMS.
The Canadian navy’s four Victoria Class subs will be out of commission within a decade, and only one is currently in working order, putting the government in a race against time to select a winner.
David Perry, president of the Canadian Global Affairs Institute, said the submarine procurement is “moving at light speed” compared to most defence procurements, and that the competition for the lucrative, multi-billion dollar contract is heated.
Choosing a winner will also be a key decision tied to Canada’s industrial and trade strategies, since both bidders and their home countries are competing fiercely behind the scenes on spinoff economic benefits to Canada.
Perry said awarding this contract would be “among the most actionable things the prime minister can do to actually achieve some of that trade diversification he’s been talking about.”
“The government of Canada can negotiate trade agreements, support trade access by having the trade commissioner service support businesses’ activities, but the government doesn’t actually trade directly, so Carney’s leverage in that respect is limited,” he said. “Purchasing a new submarine — that’s a lever he can pull on himself.”
Hanwha has talked about investments in Canadian lithium-ion battery production, liquefied natural gas, aerospace, steel and critical minerals, and is pitching to build two submarine sustainment facilities on both coasts.
Hanwha is a vertically integrated conglomerate that bills itself as South Korea’s seventh-largest business group, and is aggressively pursuing a global expansion strategy.
The company maintains that if Canada signs a contract next year, it can leverage its massive shipyard capacity to beat any rival’s delivery schedule.
It said it can build four KSS-III submarines by 2035, with the first to be delivered in 2032. After the first four are delivered, it says it can send Canada a new one every year.
The company claims this could allow Canada to avoid $1 billion on repairs by retiring the Victoria subs early. Hanwha says the 12 subs would cost in the ballpark of $20-24 billion, which does not include the infrastructure to service them.
Hanwha’s KSS-III, which is a bigger boat than its German rival, uses lithium-ion batteries and comes with vertical launch tubes that allows the subs to fire ballistic missiles straight up into the air. The Korean navy currently has the sub operating in the water, but it has not been exported yet.
South Korea is eager to grow its domestic defence industry and has pushed hard to expand exports and move itself away from overreliance on the U.S. Korea was the eighth-largest arms exporter in the world in 2023, and wants to become the fourth-largest by 2027, according to an internal National Defence document.
Germany and Norway have together ordered a dozen of TKMS’s 212CD submarines, which is a new enough design that no navy has it in the water yet.
TKMS says it can beat Canada’s tight 2035 deadline for its first sub delivery, but its delivery schedule cannot meet the aggressive pace Hanwha is offering.
TKMS company brass and the defence ministers from Germany and Norway travelled to Ottawa last week on a charm offensive ahead of Carney’s trip to South Korea, trying to sell the Canadian government on joining a club of nations operating the same subs that would allow the pooling of resources and parts.
The German defence firm is also pitching to Canada that it’s a less risky bet, touting its track record as one of the world’s longest-established sub builders and having supplied some 70 per cent of NATO’s conventional sub fleet.
This report by The Canadian Press was first published Oct. 30, 2025.
— With files from Kyle Duggan in Ottawa
Sarah Ritchie, The Canadian Press
