The Canadian government is expected to select Germany's TKMS (ThyssenKrupp Marine Systems) as the preferred negotiating partner for its next-generation submarine procurement project. This was reported by the Canadian daily newspaper The Globe and Mail, citing multiple anonymous sources.

The media noted that this announcement is merely a procedure to identify the preferred negotiator and does not signify a final contract. Nevertheless, it is regarded as a disappointing outcome for Hanwha Ocean, which has been competing with Germany's TKMS, as it effectively halts the company's push into the North American market.

■ Scale of Up to 12 Vessels... Replacing Aging Existing Forces According to The Globe and Mail, Canada plans to acquire up to 12 submarines through this project. The goal is to significantly enhance its covert operational capabilities in the Arctic, Pacific, and Atlantic waters. The Canadian Navy currently operates four submarines, but most are secondhand vessels, and the immediately operational fleet is understood to be limited.

■ Equal Performance... Deciding Factor Was 'Economic Impact' The media reported that both Hanwha Ocean's KSS-III Batch II and TKMS's 212CD submarines were deemed to meet the performance requirements of the Canadian military. Ultimately, the final selection appears to have been driven not by performance differences but by economic ripple effects, industrial cooperation, local investment, and job creation capacity as the primary evaluation factors.

Hanwha Ocean, if awarded the contract, promised more than 70 billion Canadian dollars in investment and trade effects from 2026 through 2044, along with the creation of an annual average of over 25,000 jobs. The company also reportedly presented plans to expand its local production base, including cooperation with Canadian steel companies.

On the other hand, the German side, through a joint proposal between TKMS and Norway, stated that it could generate approximately 86 billion Canadian dollars in Gross Domestic Product (GDP) growth and about 650,000 job-years of employment during the contract period.

■ Project Scale Approaching 40–50 Billion Canadian Dollars The Globe and Mail projected that the construction cost of the submarines alone would amount to approximately 20–30 billion Canadian dollars, and the total project scale, including operation, maintenance, and capability upgrades, would reach 40–50 billion Canadian dollars.

However, the media added that even after the selection of the preferred negotiator, due to the nature of the defense procurement process, negotiations over price, technology transfer, local production, and maintenance systems are likely to continue, meaning it could take considerable time before an actual contract is signed.

This project is one of the key defense procurement initiatives Canada is pursuing in line with its military modernization and the North Atlantic Treaty Organization's (NATO) defense spending expansion targets. The Globe and Mail analyzed that if Germany's TKMS successfully secures the final contract, it will further strengthen its position in the global submarine export market, while the outcome will remain a regret for Hanwha Ocean, which has been seeking to enter North America.

[This article was written with the assistance of AI. This article is not intended to solicit investment, and investment decisions and their associated responsibilities rest solely with the investor.]