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"Project Beaver," unveiled in Canada by presidential envoy Kang Hoon-sik, the chief of staff to the president, can be seen as South Korea's final weapon in the competition for Canada's 60-trillion-won submarine order.
The Canadian government initially narrowed the submarine project candidates to South Korea's Hanwha Ocean (042660) and Germany's TKMS, then demanded investment in its domestic automobile industry in return for the order. Specifically, Canada is said to have wanted additional investment from South Korea's Hyundai Motor (005380) in a finished-vehicle plant and from Germany's Volkswagen in battery production facilities, among others.
But building a new finished-vehicle plant was a difficult option, given that Canada's auto market is not large enough to justify a local factory and that U.S. tariffs have added to the burden. South Korea therefore shifted course toward "energy and hydrogen cooperation," proposing hydrogen freight truck production and charging infrastructure as an alternative to a finished-vehicle plant. Mindful of Hyundai Motor's 1993 withdrawal from its Bromont plant, South Korea sought to differentiate itself by presenting the "establishment of a hydrogen industry ecosystem linking production, charging, and mobility" as a new growth engine for Canada's auto industry, rather than an investment of uncertain profitability.
Indeed, during their Canada itinerary, Kang and officials from Hanwha Ocean, HD Hyundai Heavy Industries, and Hyundai Motor — who were part of the special delegation — held hydrogen and energy cooperation forums in Toronto and Ottawa, met with the minister of natural resources, and notably set aside time for Hyundai Motor to present its blueprint for hydrogen industry development that it has been preparing at home and abroad.
The hydrogen truck offer comes on top of a cooperation deal Hanwha signed with the Automotive Parts Manufacturers' Association (APMA) for the local production of armored vehicles and self-propelled howitzers. Building local production hubs for the K9 self-propelled howitzer — a best-seller of Korean defense — and the Chunmoo multiple rocket launcher was a strategy that read the Canadian government's intent to bolster its security sovereignty by strengthening its domestic defense supply chain.
On top of this, South Korea recently offered "space launch vehicle technology support." Glenn Copeland, CEO of Hanwha Defense Canada, said in a recent interview with Bloomberg that "Hanwha Aerospace (012450) has agreed to establish a joint venture with a Canadian commercial spaceport operator and provide rocket technology to accelerate Canada's own launch capabilities."
Canada currently has no operating launch pads or launch vehicle operators, and even relies on overseas companies such as SpaceX to put its own satellites into orbit. Just as Canadian steel — hit by U.S. tariffs — was to be used in submarine construction, the cards South Korea has put forward in this competition are seen as covering the full range of industries where Canada needs to strengthen its capabilities.
In addition, Hanwha has signed a total of 75 memoranda of understanding (MOUs) with local companies and institutions in connection with the Canadian Patrol Submarine Project (CPSP). An industry official said, "The CPSP is not simply the selection of a submarine supplier but has the character of selecting an 'economic and security cooperation partner,'" adding that "since perceptions and reputation of South Korea among Canadian regions, companies, and institutions will determine the outcome, building strategic relationships is essential."
According to an analysis by global accounting firm KPMG, if the projects proposed by Hanwha Ocean proceed, they are estimated to create 430,000 jobs in Canada and generate $96.3 billion in GDP value-added from 2026 to 2044.
Germany is also waging an all-out final push. According to foreign media, German Defense Minister Boris Pistorius said at a recent Canadian defense expo that "on the premise of winning the CPSP, the German government and shipyards will invest in various projects across Canada, generating a GDP impact of $86 billion." Germany's position is to execute a substantial portion of the initial investment within one to two years of the final decision.
Caught between South Korea's "Indo-Pacific supply chain alliance" and Germany's "NATO-centered Arctic defense alliance," the Canadian government plans to decide and announce the final winner within this month. Only one of the two — Hanwha Ocean's "Jangbogo-III Batch-II" or TKMS's "212CD" — will come out smiling.
