Ottawa picks Germany’s TKMS to build Canada’s new submarines, sources say

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The Canadian government has selected Germany’s TKMS to build a fleet of submarines for this country, two sources say.

The Globe and Mail is not identifying the sources because they were not authorized to speak publicly about the matter.

Prime Minister Mark Carney will announce the government’s decision in Halifax Monday – the outcome of a high-stakes competition between Germany and South Korea for a lucrative contract to build 12 submarines for Canada.

The purchase will give this country an unprecedented ability to patrol its coastal waters undetected. Mr. Carney had previously said the government would make its decision by the end of June, but didn’t specify an exact date.

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The announcement, which the Prime Minister will unveil before jetting to the NATO leaders’ summit in Turkey, will bring an end to a closely fought campaign by Germany’s TKMS and South Korea’s Hanwha, rivals in a contest that will shape the Royal Canadian Navy for decades.

As with the process for most major procurements, the sub announcement will likely name a preferred bidder, not guarantee a signed contract.

Negotiations will continue with the nominal winner, and it could take years to finalize a deal, said Philippe Lagassé, a professor at Carleton University who researches defence policy.

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The procurement is ultimately expected to be worth $20-billion to $30-billion for the subs themselves, and as much as $40-billion to $50-billion for operations, maintenance and upgrades.

The Prime Minister’s Office declined comment Sunday when asked about Mr. Carney’s Monday plans.

Both the German and the South Korean embassy in Ottawa declined comment.

The costly submarine contract is part of the federal government’s efforts to lift defence spending to levels not seen since the Cold War. Canada has committed to increasing this spending to 5 per cent of gross domestic product by 2035, to meet the North Atlantic Treaty Organization’s target.

Ottawa said early on that both models of diesel-electric sub would suit its purposes − Hanwha’s KSS-III Batch-II submarine or TKMS’s 212CD model – and that its decision would turn instead on the economic benefits the companies could deliver for Canada.

Hanwha has promised more than $70-billion in trade and investment in Canada, and more than 25,000 jobs annually between 2026 and 2044.

German Defence Minister Boris Pistorius said in May that the TKMS bid, a joint proposal with Norway, would add $86-billion to Canada’s GDP in terms of economic benefits over the life of the deal. The proposal is expected to create more than 650,000 job years of employment in Canada over the term of the agreement, the Germans said. A job-year means one job for one year.

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There had been reports that Ottawa was considering splitting the contract between Hanwha and TKMS, but government ministers have in recent months played down this scenario.

Canada’s planned submarine purchase will be transformative for this country’s military might, making this the first time in history that the Royal Canadian Navy will have more than a token presence underwater.

Canada hasn’t purchased unused submarines since the 1960s, during the Cold War, and has never ordered anywhere near 12 at once. Canada currently owns four subs, all of which were purchased second-hand, and only one of which is typically operational.

The Canadian military has said that it needs 12 subs to properly defend the country, based on the assumption that for high readiness only one of every four vessels would be fit to deploy, with others under maintenance or used for training.

The purchase will give Canada three submarines to deploy at any time – stealth machines that will create an ability to deter hostile or rival countries from prowling around the country’s Arctic or Pacific and Atlantic coastlines.

“It will give us much more of an ability to independently know what’s happening around our own Canadian coastal waters,” said David Perry, president of the Canadian Global Affairs Institute, a think tank.

Since August, 2025, Hanwha and TKMS – and the countries backing them – have waged a very public campaign to buy their way into Ottawa’s heart.

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The Carney government, for its part, has taken advantage of this heated rivalry to extract spending promises from bidders that would benefit its Canada-first industrial policy, which seeks to preserve and expand industrial capacity as a defence against U.S. protectionism.

Seoul-based Hanwha and TKMS, headquartered in Kiel, Germany, have pledged industrial benefits to Canada and lined up Canadian business partners who would benefit from the submarine contract.

Hanwha, for instance, in January pledged to spend US$200-million to help struggling steelmaker Algoma build a steel-beam mill in Ontario if it wins the contract. And as part of this it vowed to buy up US$50-million worth of steel from Algoma for construction under the submarine project.

“The public campaign by Hanwha and South Korea has been more visible and assertive than what we typically see in Canadian military procurements,” Prof. Lagassé said.

“TKMS and the German and Norwegian governments were slow to match South Korea’s gusto but have since been working to match it.”

Politicians and senior officials from South Korea as well as from Germany and Norway have travelled to Canada to make their pitches. The South Koreans dispatched a submarine to Canada this spring to show off their technology.

Germany has underlined its long-standing relationship with Canada, including through NATO, as well as TKMS’s record of building submarines for international customers.

“Together, Canada, Germany and Norway can build the biggest, most modern and low-risk conventional submarine fleet: building, training and maintaining together, three NATO allies, two Arctic nations,” Tjorven Bellmann, the German ambassador to Canada, said last week before the decision was made.

“Over the last 75 years, our two countries have developed a special relationship because of our partnerships and shared values, but also because we keep our promises to each other.”

Industrial benefits are a key component of many defence contract bids. Canada expects suppliers to spend in this country in fulfilment of their contracts.

But defence experts say this submarine contract competition is different from other past bidding wars for other major weapons systems, such as Canada’s last fighter-jet competition.

In 2022, Canada selected the U.S.-made F-35 over the runner-up Saab Gripen from Sweden. (The F-35 contract is currently under review by Ottawa).

“There was never any real question, I think, about what the Air Force’s preferred option would be,” Mr. Perry said of the competition that picked the F-35.

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In this contest, it’s unusual that there is no U.S. defence contractor bidding for the submarines. Canada ruled out nuclear submarines, and the United States no longer makes conventional diesel-electric subs. This also means there is less pressure from Canada’s most powerful ally to pick one submarine over the other.

Finally, South Korea, the underdog in this fight, has poured tremendous effort into the contract as the country tries to expand its military industry. TKMS on the other hand has an established reputation as an exporter of submarines: it has sold boats to 20 navies around the world, while Hanwha’s customer list for subs is far shorter: South Korea and Indonesia.

Seoul has put on a full-court press to win what would be a milestone military contract for the Asian country, which has set itself the economic objective of building the fourth-largest defence industry in the world. It ranked among the top 10 defence exporters between 2020 to 2024, according to the Stockholm International Peace Research Institute.

“The Koreans have a lot at stake and that explains why they pumped so much into the advertising and the public diplomacy side of it,” Prof. Lagassé said.

“To break into the Canadian market, a major NATO ally, with a submarine – for them that’s a much bigger deal,” Prof. Lagassé said.