Canada's submarines will be built by German shipbuilder ThyssenKrupp in $100B defence program

Canada has chosen German shipbuilder ThyssenKrupp Marine Systems (TKMS) to build the Royal Canadian Navy's new fleet of 12 submarines in what is expected to be the nation's largest defence procurement in history.

Prime Minister Mark Carney announced the decision dockside in Halifax on Monday, ending speculation about the highly contested program that will shape the navy's future for decades. The federal government will now enter negotiations with TKMS to sign a contract, a process expected to take several months.

"This project is about much more than acquiring submarines. It builds Canadian industrial capacity," Carney said. "This government campaigned on the promise we would fix Canada's chronic defence procurement problems. Today's announcement is another important step in that direction."

The German-Norwegian bid was chosen over South Korea's Hanwha Ocean. Carney signalled there was hard bargaining ahead, noting that in the event negotiations with TKMS are unsuccessful, Canada retains the right to designate Hanwha's KSS-III as the preferred supplier.

"This was a difficult, close decision between two highly qualified suppliers," Carney said. "Both the TKMS and Hanwha platforms met the capabilities of the Royal Canadian Navy, and both put forward strong proposals to maximize benefits for Canadian workers and businesses."

A senior federal official said negotiators hope to conclude a contract by next year. In its original pitch, TKMS committed to delivering four submarines by 2036, but officials said Monday that timeline could potentially be advanced to 2034.

While no overall price tag was revealed, it is believed the purchase could run up to $24 billion, with lifetime maintenance and sustainment costs adding up to $100 billion or more. Carney signalled he is committed to buying all 12 boats and said he has set aside money in the federal government's long-term fiscal framework.