Canada has selected Germany's TKMS to build up to 12 submarines to replace its aging fleet in what the country is calling the largest defence procurement in its history, Prime Minister Mark Carney announced Monday.
TKMS, majority-owned by German conglomerate Thyssenkrupp, made the bid jointly with NATO ally Norway, beating out South Korea's Hanwha Ocean after months of fierce competition, according to Al Jazeera. Carney made the announcement before departing for a NATO leaders summit in Turkiye.
"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," Carney said. 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."
Carney did not disclose the value of the contract. Canada's Globe and Mail put the cost of the submarines themselves at between 20 and 30 billion Canadian dollars, or roughly $14 billion to $21 billion U.S. The full cost including operations, maintenance, and upgrades could reach 40 to 50 billion Canadian dollars, or $28 billion to $35 billion U.S.
Canada currently owns four submarines. The contract is expected to be finalized by the end of next year at the latest, with the first four submarines expected to be delivered by 2034. TKMS's chief executive has said he would like to see the contract finalized by the end of this year, Reuters reported.
Canada has faced pressure from U.S. President Donald Trump to increase defence spending alongside other NATO allies. The country has now hit NATO's military spending target of 2 percent of gross domestic product ahead of its original schedule. NATO countries have agreed to increase spending to 5 percent of GDP on defence and security-related investments by 2035. TKMS shares closed Monday up 11 percent.
