Canada picks Germany’s TKMS to build ‘up to’ 12 submarines in largest Canadian defence purchase ever

HALIFAX and OTTAWA — The next generation of Canada’s submarine fleet is set to be built by Germany’s ThyssenKrupp Marine Systems (TKMS) in partnership with Norway, a move which the Liberal government will bring Ottawa closer to its European allies and better protect the Arctic.

Prime Minister Mark Carney made the announcement in Halifax on his way to the NATO Summit in Ankara, Turkey, in an effort to showcase to the alliance that Canada is serious about turning billions of dollars more in defence into combat-ready capabilities.

“The TKMS subs will strengthen our defence industrial base, deepen our partnerships with trusted allies, and open new opportunities for Canadian businesses in European supply chains,” said Carney on Monday.

The federal government has designated TKMS as the “preferred supplier” for the project, said Carney, selecting the builder over a South Korean bidder. Canada will now enter into negotiations with the German firm to procure “up to” 12 submarines to replace the navy’s current aging fleet.

Canada intends to conclude those talks no later than the end of 2027. If the contract with TKMS goes ahead as planned, the first four submarines are expected to be delivered to Canada by 2034. Carney said TKMS has offered to reallocate boats from German and Norwegian orders to Canada in order to make that happen.

Should those talks prove unsuccessful, he said Canada retains the right to designate South Korea’s Hanwha Ocean as the preferred choice instead.

David Perry, president of the Global Affairs Institute of Canada, said the government’s decision to go with TKMS could signal Canada’s desire to have closer defence and economic ties with Europe.

Norway and Germany are also members of NATO.

Last month, Canada secured its first contract with Poland under the Security Action for Europe (SAFE) agreement, a European defence procurement program with 150 billion euros in financing at its disposal.

“This would obviously fit pretty closely into his (Carney’s) discussions that he led about a strengthening role with the Europeans,” Perry said. “This helps bolster the link with Europe.”

Canada’s high-stakes submarine announcement puts an end to the bidding war over the last year that saw Hanwha Ocean and TKMS promise incentives to Canada with economic benefits in areas that were adjacent to the supply chain or, in some cases, had nothing to do with submarines.

For instance, the TKMS proposal included investing into the Port of Churchill in Manitoba to help it export liquefied natural gas (LNG) and partnering on large-scale carbon-capture projects in Alberta. Hanwha, for its part, offered to use Canadian-made steel, a sector hit hard by U.S. tariffs, for submarine construction and related infrastructure.

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