Prime Minister Mark Carney toured a newly completed South Korean submarine Thursday as Canada weighs a multibillion-dollar purchase to replace its aging Victoria-class fleet — a deal that could define the next generation of Canada’s naval capability.
Accompanied by South Korean Prime Minister Kim Min-seok, Carney visited the Hanwha Ocean Ltd. shipyard in Geoje, near the site of the APEC summit. The tour showcased the KSS-III (Batch 2) submarine — South Korea’s advanced diesel-electric model — which, in a symbolic gesture, flew the Canadian flag from its mast.
Hanwha Ocean and its partner Hyundai Heavy Industries have been aggressively pitching their design to Ottawa, offering to deliver four submarines by 2035, matching the Royal Canadian Navy’s retirement timeline for its current fleet.
“It’s a beautiful submarine,” said Vice-Admiral Angus Topshee, commander of the Royal Canadian Navy. “The size, the design, the crew accommodations — it’s impressive.”
Carney was joined by Defence Minister David McGuinty, who confirmed the tour is part of Ottawa’s final evaluation of competing bids from Hanwha Ocean and Germany’s ThyssenKrupp Marine Systems (TKMS).
South Korea vs. Germany
Carney visited TKMS’s facilities in Kiel, Germany, in August, but analysts say the Korean bid has momentum — particularly given its shorter delivery schedule. German officials have acknowledged that their first sub might not reach Canada until 2032 or later.
The project will be managed through Canada’s new Defence Investment Agency (DIA), with Ottawa pledging to prioritize job creation and rapid delivery. DIA cabinet secretary Stephen Fuhr said last month that the government will choose the proposal that “creates the most Canadian jobs.”
However, both McGuinty and Topshee downplayed the idea of domestic production.
“Setting up a manufacturing site for submarines is not uncomplicated,” McGuinty said.
“We’re not looking for the submarines to be built in Canada,” Topshee added. “We need them now — and we don’t have the capacity.”
Budget Still Undecided
While both designs meet the Navy’s operational requirements, Ottawa has not yet finalized the budget or funding timeline.
“The numbers are being refined,” said Topshee. “It will fit within the government’s commitment to reach NATO spending targets.”
McGuinty confirmed that the submarine program will be part of Canada’s pledge to reach two per cent of GDP in defence spending by March 2026.
Procurement Under Scrutiny
The submarine visit follows a Parliamentary Budget Office report showing Ottawa underspent $18.5 billion on defence equipment between 2017 and 2024. The report questioned Canada’s ability to manage the surge in procurement required to meet its new NATO commitments.
Despite those concerns, Thursday’s visit signalled Ottawa’s readiness to move quickly. Hanwha officials said Carney asked “detailed, technical questions” and appeared impressed with what he saw.
With Canada’s four Victoria-class subs set to retire by 2035, a final decision on their replacements could come as early as next year — potentially marking the largest naval procurement in Canadian history.
