The 60 Trillion Won Project Could Shape Future K-Maritime Defense Exports while Canada Is Expected to Pick a Final Bidder on at June 30 or at the beginning of July
Korean style KSS-III submarine.
With the Canadian Patrol Submarine Project (CPSP) expected to take shape as early as at the end of June, the competition for the contract between South Korea and Germany is heading into its final stages. This project, with a maximum scale of 60 trillion won (approximately $40 billion based on won-dollar rate 1,500), is considered the biggest watershed to gauge the export competitiveness of South Korea’s next-generation maritime defense industry.
According to the defense industry on May 21, the Canadian government is expected to select the final contractor for the CPSP between at the end of June and at the beginning of July at the earliest.
The CPSP is a massive project to introduce up to 12 diesel submarines to replace four aging Victoria-class submarines of the Canadian Navy, which are scheduled to be decommissioned in the mid-to-late 2030s. The scale of the project reaches up to 60 trillion won, including about 20 trillion won for submarine construction costs and about 40 trillion won for maintenance, repair, and operation (MRO) costs over the next 30 years. It is the largest project in the history of Canadian defense procurement.
As it is known that three out of the four submarines currently operated by the Canadian Navy are in a state of maintenance or restricted operations, the need to secure new submarines has grown. Canada initiated the project in earnest by issuing a Request for Information (RFI) in September 2024 and closed the bidding process at the end of April this year. It is reported that the proposal supplementation and revision procedures have now been completed, leaving only the selection of the final contractor.
Currently, a consortium of South Korea’s Hanwha Ocean and HD Hyundai Heavy Industries is engaged in the final competition with Germany’s ThyssenKrupp Marine Systems (TKMS). Previously, the Canadian government narrowed down the competitive landscape by selecting the two companies as qualified suppliers in August last year.
South Korea is waging an all-out effort with Hanwha Ocean and HD Hyundai Heavy Industries taking joint action in the form of ‘Team Korea’. Hanwha Ocean is actively leading the bid, and HD Hyundai Heavy Industries is expected to participate in joint construction in the future.
Hanwha Ocean is putting forward the 3,000-ton class KSS-III submarine, which the South Korean Navy has deployed and is operating in actual combat. It highlights as its strengths the fact that it shares the same platform as the Dosan Ahn Chang-ho-class submarine, along with its long cruising range, large-scale weapon payload capacity, and competitive edge in fast delivery. In particular, it is evaluated that it can demonstrate proven operational capabilities given that it is a platform with accumulated construction and operational experience.
Support measures at the government level are also continuing. The government appears to be adding momentum to the bidding war ahead of the final decision on the CPSP. Lee Yong-cheol, Minister of the Defense Acquisition Program Administration, will attend a welcoming ceremony for the arrival of the Dosan Ahn Chang-ho submarine and the frigate Daejeon in Victoria, British Columbia, Canada, on May 24 (local time) to provide last-minute support for the CPSP. Chief of Naval Operations Kim Kyung-ryul will also visit Canada from May 21 to May 29 to discuss military and defense industry cooperation measures with high-ranking officials of the Canadian Navy.
Presidential Chief of Staff Kang Hoon-sik is also scheduled to visit Canada at the beginning of June in his capacity as a presidential special envoy for strategic economic cooperation to target the final stage of the CPSP bid, where he will attend the ‘Korea-Canada Resource Security Supply Chain Cooperation Forum’.
Previously, Minister of Trade, Industry and Energy Kim Jung-kwan also visited Canada from May 5 to May 6 to carry out activities supporting the CPSP bid. Meeting with Canadian Minister of Industry Melanie Joly at the time to discuss bilateral industrial cooperation measures, Minister Kim stated, “Winning the Canadian submarine project contract will be an important turning point for building a long-term partnership between the two countries, going beyond a simple defense procurement project.”
On the other hand, Germany’s TKMS is presenting its long-standing submarine technological prowess and design experience as its strengths. The Type 212CD submarine proposed by TKMS for this project is a next-generation model being jointly designed with the Norwegian defense company Kongsberg. It emphasizes its long-term submerged operational capabilities suitable for the Arctic Ocean environment, which is Canada’s area of operations.
The first Type 212CD submarines, four in total, are scheduled to be delivered to the Norwegian Navy in 2029. However, TKMS Chief Executive Officer (CEO) Oliver Burkhard also emphasized that the first submarine can be delivered within the timeline requested by Canada. As the submarine project is a long-term endeavor involving decades of maintenance, parts supply, and crew training, the operational support system and the level of accumulated technology are also expected to act as important evaluation factors.
The industry is also noting that the Canadian government is placing significant emphasis on evaluating not only the submarine’s performance but also the maintenance system and economic ripple effects. According to the evaluation criteria presented by the Canadian government, the performance of the submarine accounts for about 20%, but the weight of maintenance and logistics support is known to reach 50%. The utilization of local Canadian industries and the effect of job creation were also included as major evaluation items.
Experts believe that the result of this project will be a watershed to gauge the future export competitiveness of the K-maritime defense industry. Choi Gi-il, a professor at the Department of Military Science at Sangji University, said, “State-to-state arms deals like the submarine project are not determined merely by simple price competition, but are a field where international politics, diplomatic and security relations, and alliance structures also act in a complex manner.”
He continued to explain, “Initially, Germany’s TKMS had put effort into targeting the local Canadian market earlier than South Korea, but there are also assessments recently that the burden on the German side has increased regarding the Canadian side’s high demands for local industrial cooperation. On the other hand, as the South Korean government steps up with active support and the presentation of favorable conditions, observations are also being raised inside and outside the industry that the atmosphere is currently leaning somewhat toward the South Korean side.”
Jung Min-hee
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