HD Hyundai, Hanwha join forces for $17.4b Canadian submarine bid

Korea’s leading shipbuilders have teamed up to pursue a Canadian submarine project estimated to be worth up to 24 billion Canadian dollars ($17.4 billion), easing their long-standing rivalry in the special shipbuilding sector, industry sources said Wednesday.

HD Hyundai Heavy Industries and Hanwha Ocean, two of Korea’s largest shipyards, jointly submitted a proactive proposal to the Canadian government in March for the project, which aims to add up to a dozen 3,000-ton-class submarines to the country’s fleet.

The submission outlined key specifications of the submarines, estimated delivery schedules and other relevant details, ahead of the project’s formal solicitation of participants.

“We are exploring various approaches to win this project, and joint participation is one of them,” said an official from one of the two companies, speaking on condition of anonymity.

According to a Monday report by the Canadian Broadcasting Corporation, the two companies proposed to offer advanced KSS-III-class submarines, developed with domestic Korean technology.

The report also highlighted that the proposal emphasizes fast delivery and includes plans to build maintenance facilities in Canada. These facilities would employ Canadian nationals, aligning with the country’s economic and industrial priorities.

The companies reportedly pledged to deliver the first four submarines by 2035, the same timeline the Canadian Navy had originally set for receiving just one vessel.

This collaboration follows a strategic agreement between the two companies and Korea’s Defense Acquisition Program Administration, under which they agreed to cooperate in pursuing overseas defense contracts.

The two companies have been at odds over Korea's 7.8 trillion won ($5.5 billion) next-generation Aegis-equipped destroyers project, currently stalled due to unresolved disputes over contractor selection.

The Korean defense authority led the partnership out of concern that internal competition could hinder the country’s chances in major global defense bids, especially after both companies failed to win Australia’s $7.3 billion frigate project in November.

Under the agreement, the two shipbuilders will alternate leadership roles in joint bids depending on the project’s nature. For the Canadian submarine project, Hanwha Ocean is expected to take the lead, leveraging its extensive experience in submarine construction.

Hanwha Ocean is recognized for its submarine-building capabilities, having secured 70 percent of the total submarine contracts placed by the Korean Navy as of Wednesday.

While industry insiders expect Canada to officially launch the project around 2027, shipbuilders from Germany, Norway and Spain are also anticipated to participate in the bid.