GEOJE, South Korea — Prime Minister Mark Carney climbed aboard a South Korean submarine Thursday as he toured the sprawling Hanwha Ocean Shipyard on Geoje Island — one of two companies competing for Canada’s next-generation submarine contract, a multibillion-dollar deal set to reshape the country’s naval capabilities and trade relationships.
Accompanied by Defence Minister David McGuinty, Vice-Admiral Angus Topshee, Commander of the Royal Canadian Navy, and South Korean Prime Minister Kim Min-Seok, Carney examined Hanwha’s advanced facilities, including its automated robotic welding operations. The visit underscored the high stakes surrounding Ottawa’s plan to acquire up to 12 new submarines to replace the aging Victoria-class fleet, a project central to Canada’s strategy to strengthen its military presence in the Arctic and diversify its trade partnerships.
Earlier in the day, Carney met with South Korean President Lee Jae-Myung, where both leaders pledged to deepen defence and industrial cooperation. South Korean officials have framed the submarine bid as part of a broader economic partnership, noting that South Korea has become NATO’s second-largest arms supplier after the U.S.
Carney’s visit comes two months after he toured the rival ThyssenKrupp Marine Systems (TKMS) facility in Kiel, Germany, the other finalist in the competition. Both companies are aggressively lobbying Ottawa, backed by diplomatic efforts from their respective governments.
A race against time — and for influence
Canada’s four Victoria-class submarines are expected to retire within the next decade, and only one remains operational. Defence analyst David Perry of the Canadian Global Affairs Institute said the procurement process is moving “at light speed” by military standards, calling it one of the most consequential defence and trade decisions of Carney’s term.
“Purchasing a new submarine — that’s a lever he can pull on himself,” Perry said. “It’s one of the few direct ways the prime minister can turn trade diversification talk into action.”
The Hanwha offer
Hanwha, South Korea’s seventh-largest conglomerate, is pitching its KSS-III submarine — a larger vessel than its German counterpart, powered by lithium-ion batteries and equipped with vertical launch tubes capable of firing ballistic missiles. The Korean navy already has the KSS-III in operation, though it has not yet been exported.
The company claims it can build four submarines by 2035, with the first delivered in 2032, and then provide one additional sub per year thereafter. It estimates the 12-sub fleet will cost between $20 and $24 billion, excluding infrastructure, and argues its rapid production could save Canada $1 billion in maintenance costs by retiring the old fleet sooner.
Hanwha has also proposed major Canadian investments, including projects in lithium-ion battery production, LNG, aerospace, steel, and critical minerals, as well as the creation of two submarine sustainment hubs — one on each coast.
The German counteroffer
Germany’s TKMS, meanwhile, is offering its 212CD-class submarines, a design jointly ordered by Germany and Norway but not yet operational. TKMS touts its long-established record — supplying 70% of NATO’s conventional submarine fleet — and argues that joining its multinational program would allow Canada to share parts, training, and logistics with European allies.
However, the company’s production timeline appears less aggressive than Hanwha’s, though it insists it can still meet Canada’s 2035 deadline for the first delivery.
Strategic stakes
Beyond military modernization, the deal carries significant geopolitical implications. South Korea is racing to become the world’s fourth-largest arms exporter by 2027, while Canada seeks to expand trade ties in Asia and reduce reliance on traditional Western suppliers.
As the competition intensifies, the submarine contract could become one of the defining industrial decisions of Carney’s leadership — blending defence strategy, economic diplomacy, and national security priorities into a single, high-pressure choice.