[Yang Nak-gyu's Defence Club] Hanwha Ocean Accelerates Speed Battle for Canadian Submarine Export

Hanwha Ocean has officially launched its bid for the Canadian submarine contract. The strategy is to increase the possibility of exporting ‘K-defense’ by signing memorandums of understanding (MOUs) with local Canadian companies.

[Image source=Yonhap News]

According to industry sources on the 6th, Hanwha Ocean attended the ‘Deep Blue Forum 2023,’ Canada’s only submarine-specialized forum held in Ottawa, and signed a total of four MOUs with four local companies for the Canadian submarine project.

The Canadian government plans to spend about 60 trillion won to order 12 submarines to replace the four Victoria-class submarines currently operated by the navy. The 60 trillion won includes maintenance costs, and the construction cost per submarine is estimated to be around 2 trillion won. The Canadian submarine project is expected to select a contractor as early as 2026.

Within the industry, Hanwha Ocean’s export competitiveness is evaluated to be higher. Hanwha Ocean has experience building a total of 21 submarines, including nine 209-class, three 214-class, and three 3,000-ton submarines, and has also exported six 1,400-ton submarines.

HD Hyundai Heavy Industries has also strengthened cooperation to enhance competitiveness. In June, HD Hyundai Heavy Industries signed a Technical Cooperation Agreement (TCA) with Babcock, a British defense company, for the Canadian export submarine project. However, HD Hyundai Heavy Industries has built a total of nine submarines domestically, including six 214-class and one 3,000-ton submarine, but has no export experience.

For this reason, HD Hyundai believes it should join forces with Hanwha Ocean and enter the bidding together. Since the large-scale submarine project, expected to involve 12 submarines, is difficult for one company to handle alone, the logic is that the Korean government should secure the submarine construction project through a government-to-government (G2G) deal with Canada and then divide the production volume with Hanwha Ocean. Woo Won-sik, Managing Director of HD Hyundai’s Special Ship Business Division, recently said at a corporate briefing, "The Canadian submarine project can be seen as a competition between nations," adding, "It will likely be a competition between countries in the form of a ‘Team Korea.’"

Hanwha Ocean, however, is drawing a clear line on this. A Hanwha Ocean official said, "Although Japan sometimes conducts defense exports through G2G deals, competition is fundamental in our defense market," and added, "If the project volume is large, it can be divided into first and second phases for production." The official also mentioned, "When exporting defense products, conditions such as technology transfer complicate matters if a consortium is formed."

An industry insider said, "Delivering submarines requires high technical skills and know-how, and Hanwha Ocean, with its rich construction experience, is considered highly competitive," and added, "Hanwha Ocean is expected to compete with Japanese shipbuilders for the Canadian submarine contract."

This content was produced with the assistance of AI translation services.