Canada picks Germany’s TKMS for new submarines

Canada has chosen German naval shipbuilder TKMS to construct its next fleet of submarines, a decision that represents the country's largest-ever defense procurement.

TKMS, majority-owned by German conglomerate Thyssenkrupp, partnered with NATO ally Norway to secure the contract. They outbid South Korea's Hanwha Ocean after a prolonged competition.

Prime Minister Mark Carney emphasized the strategic importance of the acquisition, stating, "In a more dangerous and divided world, Canada must be prepared to defend our interests, protect our citizens, build our economy, and secure our future." He added, "Together with our German and Norwegian Allies, we will build at speed and scale to expand our strategic capabilities and create greater strategic autonomy. We will build this fleet to build Canada strong."

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In a more dangerous and divided world, Canada must be prepared to defend our interests, protect our citizens, build our economy, and secure our future.

The value of the deal has not been disclosed, but Canadian media estimates the cost for the submarines alone at 20 to 30 billion Canadian dollars, with total costs including operations and maintenance potentially reaching 40 to 50 billion Canadian dollars. Canada currently operates four submarines. The first of the new vessels is slated for delivery by 2034, although TKMS's CEO has expressed a desire to finalize the contract by the end of this year.

This procurement aligns with Canada's commitment to increasing defense spending, having recently met NATO's target of 2 percent of GDP. The country is also part of a broader NATO goal for member states to invest 5 percent of GDP in defense and security by 2035. TKMS shares saw a 11 percent increase following the announcement.

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Together with our German and Norwegian Allies, we will build at speed and scale to expand our strategic capabilities and create greater strategic autonomy. We will build this fleet to build Canada strong.