Hanwha Ocean (042660.KS) cleared a significant diplomatic hurdle in its bid for Canada's largest-ever defence procurement after British Ambassador to South Korea Colin Crooks publicly stated on June 26 that "the U.K. government would like to work with Hanwha on the Canadian submarine project" during a meeting with President Lee Jae Myung at the Blue House.
The declaration makes the United Kingdom the first Five Eyes ally to openly endorse the Korean shipbuilder in the Canadian Patrol Submarine Project (CPSP) — a programme valued by industry analysts at approximately USD 43 billion (KRW ~60 trillion / CAD ~60 billion), under which Ottawa plans to acquire up to 12 new conventionally powered submarines to replace its ageing Victoria-class fleet.
Strategic Alliance: Hanwha + Babcock Canada
Hanwha Ocean's bid rests on a teaming agreement signed in January 2026 with Babcock Canada, the Canadian arm of Britain's Babcock International Group — the same contractor currently providing in-service support for Canada's four existing submarines.
Under the arrangement, Hanwha Ocean would supply the submarine platform and oversee construction at its Geoje shipyard (where block-assembly lines and automated manufacturing systems are already operational), while Babcock Canada would manage in-country maintenance, repair and overhaul (MRO) and long-term sustainment, generating local industrial benefits for Canada.
The UK ambassador's statement is particularly significant because it plugs the main criticism of the Korean bid: Hanwha Ocean is not a NATO member state, raising concerns about technology transfer protocols and sensitive data handling. Ambassador Crooks's backing signals that the United Kingdom's NATO membership and Five Eyes intelligence-sharing status can effectively bridge that gap.
The Race: Korea vs. Germany
The CPSP field has narrowed into what analysts describe as a two-way race:
| Bidder | Platform | Alliance Framework |
|---|---|---|
| Hanwha Ocean (Korea) + Babcock Canada (UK) | KSS-III Jangbogo-III class | UK NATO/Five Eyes bridge |
| ThyssenKrupp Marine Systems (Germany) | Type 212CD (co-developed with Norway) | NATO-integrated framework |
Hanwha's KSS-III has demonstrated long-range operational credentials — the South Korean navy submarine ROKS Dosan Ahn Chang-ho visited Canadian Forces Base Esquimalt earlier this year, giving Canadian naval officers first-hand exposure to the platform.
On schedule, Hanwha pitches the fastest delivery in the competition: four KSS-III submarines delivered before 2035, contingent on contract award in 2026. South Korea's industry minister has stated that Seoul "holds a clear edge over Germany" on both platform maturity and delivery timelines.
Investment Angle
A contract win would mark the first time a non-Western shipbuilder has supplied a strategic naval platform to a Five Eyes nation and would rank among the largest single-country defence export wins in South Korean history. The KRW 60 trillion contract value rivals the combined annual capex of Korea's three largest shipbuilders.
For equity investors, the direct read-through sits in Hanwha Ocean (042660.KS), which has been repositioning from commercial shipping into high-value defence work. Babcock International Group (BAB.L) would capture the in-country sustainment economics. Canada has not yet disclosed a final contract decision timeline.
