Hanwha Ocean Secures Korean Destroyer Project, Raising Hopes for Canadian Submarine Contract

Standing on Equal Ground with Germany’s TKMS

"Need to Overcome Political Factors as a NATO Member"

With Hanwha Ocean virtually securing the detailed design and lead ship construction project for the "Korean Next-Generation Destroyer (KDDX)," expectations are rising that the company may also win the contract for the "Canadian Patrol Submarine Project (CPSP)."

According to the industry on June 12, the Defense Acquisition Program Administration (DAPA) notified Hanwha Ocean and HD Hyundai Heavy Industries of the results of the KDDX proposal evaluation the previous day.

In June last year, an LNG (liquefied natural gas) carrier fully occupying the yard dock at Hanwha Ocean Okpo Shipyard in Geoje, Gyeongnam, continued construction work with its lights on. Photo by Jinhyeong Kang

The results showed that Hanwha Ocean led by a narrow margin of approximately 0.58 points, as HD Hyundai Heavy Industries received a 1.2-point deduction for a security issue. While follow-up procedures such as objections from the participating companies remain, it is expected that, barring any significant issues, the preferred negotiation partner will be finalized in early July even if HD Hyundai Heavy Industries files a formal lawsuit.

The KDDX project involves investing 7.8 trillion won to design and build six 6,000-ton class Aegis destroyers. Although the construction is likely to be split, the company responsible for the detailed design will have the initiative in the project, leading to fierce competition between HD Hyundai Heavy Industries and Hanwha Ocean.

With Hanwha Ocean virtually selected as the preferred negotiation partner for KDDX, the company has now secured dominance in the next-generation naval vessel market. This title is expected to provide Hanwha Ocean with strong competitiveness in future overseas naval export markets as well.

Building on the momentum from the KDDX project, Hanwha Ocean is also making an all-out effort to win the CPSP contract. Traditionally, Germany's Thyssenkrupp Marine Systems (TKMS), a strong player in the diesel submarine sector, has been considered overwhelmingly favored. However, there is now a growing view that the "one team" strategy established by Hanwha Ocean and the Korean government is shifting the landscape.

Having secured both performance and price competitiveness for its submarines and with active government support, Hanwha Ocean has narrowed the gap by forming various partnerships with local businesses. Hanwha Ocean has signed memoranda of understanding (MOUs) with Canadian steelmakers, the auto parts manufacturers' association, and construction companies to build local production capabilities. In addition, the Korean government's efforts to expand cooperation in the liquefied natural gas (LNG) business, as well as a package deal encompassing energy and industry—such as the "Beaver Project" centered on constructing a hydrogen truck manufacturing plant—have led to favorable local sentiment toward Korea's proposal.

Canadian local media suggested the CPSP preferred negotiation partner could be selected this month, but recent observations indicate that the decision may be delayed until early July. With a North Atlantic Treaty Organization (NATO) summit scheduled for early next month, the Canadian government may feel pressured to announce the contract results just before the meeting, given the need to consider diplomatic relations with Germany.

An official in the shipbuilding industry said, "Hanwha Ocean has definitely secured competitiveness in objective indicators such as performance and price," but added, "The final hurdle will be overcoming the pro-German sentiment Canada holds as a NATO member, which is a political factor."

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