Canada nears decision on Korean, German submarine bids
· UPIJune 17 (Asia Today) -- Canada is expected to select a preferred bidder within 30 days for a major submarine procurement program, narrowing the competition to South Korea's Hanwha Ocean and Germany's Thyssenkrupp Marine Systems.
The Canadian Patrol Submarine Project calls for the acquisition of up to 12 conventionally powered submarines to replace the Royal Canadian Navy's four aging Victoria-class vessels.
The acquisition, infrastructure and long-term maintenance program has been estimated by South Korean industry officials at at least 60 trillion won, or about $39.7 billion. Some estimates place its potential value over several decades as high as 120 trillion won, or about $79.4 billion.
Stephen Fuhr, Canada's secretary of state for defence procurement, said Ottawa expected to choose a preferred bidder within 30 days, according to Politico.
The selection would grant one bidder the right to enter detailed negotiations with the Canadian government, although it would not constitute a final contract award.
Canada previously identified Hanwha Ocean and Germany's Thyssenkrupp Marine Systems as the two qualified suppliers for the program.
The contest has entered its final stage as South Korea promotes a package combining submarine construction, government-backed financing and broader industrial cooperation.
Canadian procurement chief visits South Korea
Fuhr visited Hanwha Ocean's shipyard in Geoje, about 205 miles southeast of Seoul, on Feb. 2 with Canadian government and business representatives.
He toured the shipyard's assembly facilities and automated production equipment and boarded the ROKS Jang Yeong-sil, the first 3,000-ton submarine in South Korea's Dosan Ahn Changho Batch-II class, while it was undergoing sea trials.
Fuhr was accompanied by Hanwha Ocean Chief Executive Kim Hee-cheul and senior South Korean officials.
He later visited the South Korean Navy's Submarine Force Command in Jinhae to examine its training, logistics and maintenance systems.
Hanwha Ocean said the visit allowed the Canadian delegation to assess South Korea's submarine manufacturing capacity and its ability to provide long-term maintenance and operational support.
Canada seeks submarines for three oceans
Canada wants its future fleet to operate across the Atlantic, Pacific and Arctic oceans while maintaining interoperability with the United States and other allies.
Its requirements include long range, extended endurance, under-ice capability and reliable maintenance support.
Hanwha Ocean is offering a version of South Korea's Dosan Ahn Changho-class submarine, also known as the KSS-III.
The company has emphasized that the platform is already in production and can be delivered more quickly than a newly developed design. It has also proposed cooperation with Canadian universities, shipyards and defense companies.
Thyssenkrupp Marine Systems is offering the Type 212CD submarine, a new design being developed for Germany and Norway.
The German bidder has highlighted its long-standing relationships within NATO, European defense supply chains and proposed investment in Canadian industry.
Germany and Norway have also reportedly examined changes to their own production schedules to make earlier delivery slots available to Canada.
Industrial benefits could determine outcome
Canada has made domestic jobs, industrial investment and long-term economic benefits central elements of the procurement.
The government has said work associated with the submarines should strengthen Canada's marine and defense industries throughout the fleet's operational life.
South Korea has therefore sought to expand its proposal beyond the construction of submarines.
Canadian officials have discussed potential South Korean investment in Canada's automotive and transportation industries, according to people familiar with the negotiations.
South Korean companies have responded by exploring a hydrogen-powered commercial vehicle and fueling network rather than committing immediately to a conventional automobile assembly plant.
Hyundai Translead, Hyundai Motor Group's North American trailer manufacturing subsidiary, has signed a dealership agreement with Canadian commercial vehicle dealer Breadner Trailers for Hyundai's XCIENT hydrogen fuel-cell trucks.
The trucks have accumulated more than 1 million miles, or 1.6 million kilometers, of commercial driving in North America, according to Hyundai.
Glenn Copeland, president of Hanwha Ocean's Canadian subsidiary, previously said Hyundai Motor Group had presented an initial proposal to Canadian officials for a hydrogen freight transportation corridor.
The plan could support Canada's transportation decarbonization policies while adding a civilian industrial component to South Korea's submarine offer.
Seoul prepares financial support
The South Korean government and state financial institutions are also preparing export financing to support the bid.
The Korea Trade Insurance Corp. and the Export-Import Bank of Korea have expanded financing programs for major overseas projects in defense, nuclear power and other strategic industries.
South Korean officials have said as much as 100 trillion won, or about $66.1 billion, from a broader export financing initiative could be made available for defense and nuclear energy projects. The amount does not represent financing committed exclusively to the Canadian submarine program.
Hanwha Ocean has also sought to demonstrate the strength of its domestic supply chain.
At the World Defense Show in Riyadh in February, the shipbuilder signed cooperation agreements with 11 South Korean defense and submarine equipment companies, including LIG Nex1, Hanwha Aerospace, Kolon Spaceworks, KTE and Firstec.
Hanwha Ocean says more than 80% of the components used in its proposed submarine can be supplied domestically.
A South Korean defense industry official said the final decision would depend not only on submarine performance but also on financing, delivery schedules, maintenance support and benefits for Canadian industry.
"Canada's submarine project is more than a weapons sale," the official said. "The remaining competition will be decided by which bidder can offer the most credible combination of capability, delivery and long-term industrial cooperation."
-- Reported by Asia Today; translated by UPI
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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260616010005537