Canada chooses German company to build new submarine fleet: sources

The Canadian government has chosen a German company to build Canada’s new submarine fleet.

Two senior industry sources with knowledge of the process have confirmed to CTV News that Germany’s TKMS will be awarded the lucrative contract for 12 new submarines.

Prime Minister Mark Carney will officially announce the decision, which was first reported by the Globe and Mail, in Halifax on Monday before heading to a NATO leaders’ summit in Turkiye.

TKMS is the world’s largest manufacturer of non-nuclear submarines and supplies approximately 70 per cent of NATO’s fleet. Also known as ThyssenKrupp Marine System, the TKMS bid was made in partnership with Norway.

Along with procuring the submarines, Canada’s project involves paying for 30 to 50 years of maintenance. The contract, over its entire lifespan, has an estimated value of more than $100 billion.

According to industry sources cited by Reuters, the submarine order itself is estimated to be worth more than US$12 billion.

One of Canada’s largest ever military procurements, the vessels are meant to replace Canada’s current fleet of four British-made Victoria-class submarines, which have been plagued with issues since they were purchased in 1998.

In the last few weeks, there have been some hints about the direction the government was going with the submarine contract. In late June, Canada’s Department of National Defence posted an advanced contract award to a consulting firm that has experience in dealing with submarines and NATO countries. One of the strengths the Germans kept touting in their bid was compatibility with NATO. South Korea is not a NATO member, and the Germans argued that Hanwah did not have the same connectivity with NATO countries that TKMS, the German-Norwegian consortium, does.

The Globe and Mail reports that negotiations will continue to finalize a deal after TKMS is announced as the preferred bidder, which is not necessarily a guarantee that a contract will be signed.

Carney’s government has vowed to meet NATO’s new defence spending target, which is pegged at five per cent of member nations’ GDP. Canada reached the alliance’s previous two per cent benchmark earlier this year.

With files from CTV News Ottawa Bureau Chief Graham Richardson, CTV National News Senior Correspondent Judy Trinh, Reuters and The Associated Press.

This is a breaking story and will be updated.