South Korea's Hanwha further expands its industrial bid for Canada’s Patrol Submarine Project.

South Korea's Hanwha expanded its bid for Canada’s Patrol Submarine Project by establishing a multi-sector industrial cooperation framework with Canadian partners across steelmaking, space systems, artificial intelligence, and defense electronics.

On January 27, 2026, Hanwha formalized industrial cooperation agreements with five Canadian companies as part of its bid for Canada’s Patrol Submarine Project. The framework links submarine procurement with domestic steel production, satellite communications, artificial intelligence, electro-optical systems, and long-term sustainment. The approach aligns with Canadian requirements to position the submarine program as a long-term industrial and sustainment effort rather than a standalone naval procurement.
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The KSS-III could meet Canada's submarine requirements for Atlantic, Pacific, and limited under-ice Arctic missions, with an operational range exceeding 7,000 nautical miles and submerged endurance beyond three weeks. (Picture source: Hanwha)

The initiative brings together Hanwha Ocean and Hanwha Systems and reflects Canada’s requirement that major defense procurements, such as this submarine competition, generate measurable domestic economic benefits over several decades. The effort is positioned as a multi-sector industrial package aligned with Canada’s priorities on domestic manufacturing, sovereign capabilities, and sustained job creation. It is also framed as part of a wider Canada–South Korea relationship covering defense, industry, technology, and security cooperation. The submarine program is therefore treated as a catalyst for industrial integration across provinces and sectors rather than a single naval procurement decision.

A key element of Hanwha Ocean’s proposal is the localization of steel production and sustainment infrastructure in Canada. Hanwha Ocean and Algoma Steel entered a binding arrangement with an aggregate potential value of up to $250 million, equivalent to about CAD $345 million, combining support for a new structural steel beam mill and anticipated steel purchases. The cooperation explicitly links Canadian steel production to submarine manufacturing as well as to long-term maintenance, repair, and overhaul infrastructure planned on both the Atlantic and Pacific coasts. Facilities in Nova Scotia and British Columbia are identified as locations where the submarine fleet would be supported throughout its service life. Algoma’s transition to electric arc furnace steelmaking and a modernized plate mill is part of the industrial context, with a stated emissions reduction target of about 70 percent once fully implemented. The beam mill project is also intended to supply steel for wider Canadian infrastructure, housing, and road construction projects, creating demand beyond the submarine program.

Hanwha Systems’ contribution to the bid focuses on secure communications and space-related industrial cooperation relevant to submarine and maritime operations. An agreement with Telesat centers on Low Earth Orbit (LEO) satellite connectivity and user terminals compatible with the Telesat Lightspeed network, with an emphasis on secure, high-capacity, and resilient communications for submarine missions. The same agreement explores interoperability with Korea’s K-LEO satellite constellation and shared terminal architectures. In parallel, a separate arrangement with MDA Space targets advanced satellite technologies, pairing software-defined satellite solutions with defense electronics and systems integration. These arrangements are positioned as supporting command, control, and data resilience requirements for modern submarine operations, while anchoring satellite-related industrial activities in Canada.

Artificial intelligence and sensor technologies form another layer of Hanwha’s industrial proposal for this Canadian submarine procurement. Hanwha Ocean, Hanwha Systems, and Cohere agreed to cooperate on AI models, including large language and multimodal systems, with applications tied to submarine operations and shipyard processes such as design, production, and maintenance. The MoU could convert shipbuilding experience, defense integration, and enterprise AI capabilities into potential operational and industrial applications. Separately, Hanwha Systems and PV Labs agreed to cooperate on electro-optical and infrared tactical systems, including local development, system integration, production in Canada, and technology transfer. The arrangement includes joint marketing for export markets and is associated with skilled employment and regional economic activity, particularly in Ontario.

For the naval component of the Canadian Patrol Submarine Project (CPSP), Hanwha Ocean is offering the KSS-III diesel-electric submarine, already in operational service and in active production. Incorporating air-independent propulsion (AIP) to support extended submerged operations, the KSS-III is positioned to meet Canadian requirements for Atlantic, Pacific, and limited under-ice Arctic missions, with an operational range exceeding 7,000 nautical miles and submerged endurance beyond three weeks. Hanwha states that, if a contract is signed in 2026, four submarines could be delivered by 2035, allowing the retirement of the Victoria-class submarine fleet before that date. Earlier retirement is linked to estimated savings of about $1 billion in maintenance and support costs, while eight additional submarines would follow at a rate of one per year, completing a fleet of up to 12 boats by 2043.

The Canadian Patrol Submarine Project itself is a multi-decade acquisition intended to replace the Royal Canadian Navy’s four Victoria-class submarines, whose service lives are expected to end between the mid and late 2030s. The CPSP foresees the procurement of up to 12 conventionally powered, under-ice capable submarines, alongside training systems, infrastructure, and long-term sustainment. Publicly available cost figures for the project range from roughly $60 billion to values approaching $100 billion when full life-cycle costs are considered, placing it among the largest military procurements in Canadian history. From six offerings, the competition was narrowed in August 2025 to two bidders, Hanwha Ocean and Germany’s ThyssenKrupp Marine Systems, with a final decision expected in 2026. Notably, industrial and technological benefits for Canada are treated as core evaluation criteria alongside delivery timelines and operational capability.

Operational requirements for the future CPSP submarines emphasize long-range covert patrols and sustained endurance across Canada’s three ocean approaches. The capability set includes the ability to operate undetected over distances of at least 7,000 nautical miles, remain continuously submerged for a minimum of 21 days, and sustain operations for no less than 60 days without external support. The submarines are also required to launch and recover unmanned underwater vehicles (UUVs) and to integrate communications compatible with U.S. military systems. While conventional diesel-electric submarines can conduct limited under-ice operations, extended under-ice missions remain associated with nuclear-powered designs, which Canada has ruled out. These requirements drive not only the submarine design but also the scale of training, maintenance, and industrial infrastructure that must be sustained in Canada for decades.

On the competing side, Germany's ThyssenKrupp Marine Systems (TKMS) is advancing an investment-linked proposal centered on the Type 212CD submarine developed jointly with Norway. The German bid integrates submarine procurement with a multi-billion-dollar industrial package involving German and Norwegian partners and extending into sectors such as critical minerals, artificial intelligence, and automotive battery production. The Type 212CD is a conventionally powered design using diesel engines, lithium-ion batteries, and fuel-cell-based air-independent propulsion, with armament based on 533 mm torpedo tubes. As with the Hanwha proposal, industrial participation and long-term economic activity in Canada are treated as decisive factors. The outcome of the competition will therefore reflect not only submarine characteristics and delivery schedules but also the breadth and durability of the industrial ecosystems each bidder proposes to embed in Canada.

Written by Jérôme Brahy

Jérôme Brahy is a defense analyst and documentalist at Army Recognition. He specializes in naval modernization, aviation, drones, armored vehicles, and artillery, with a focus on strategic developments in the United States, China, Ukraine, Russia, Türkiye, and Belgium. His analyses go beyond the facts, providing context, identifying key actors, and explaining why defense news matters on a global scale.