South Korea pitches Canada on $20B-plus plan for subs, armoured vehicles

A trio of South Korean companies have made a significant, multibillion-dollar pitch to Canada, promising to quickly replace the navy's aging submarines, deliver more firepower to the army and help revitalize the country's defence industrial base.

A detailed overview of the unsolicited proposals, which were delivered to the federal government in early March, was given to CBC News.

The companies have the full backing of the South Korean government, which is eager to expand the defence and security partnership it signed with former prime minister Justin Trudeau two years ago in Seoul.

CBC News was given unprecedented, exclusive access to senior Korean defence and security officials as well as two defence plants and shipyards, which have set aside their competitive differences in order to bid on Canada's submarine replacement program.

Hanwha Ocean and Hyundai Heavy Industries submitted a detailed, joint presentation worth $20 billion to $24 billion, promising to deliver the first four submarines by 2035, the current Royal Canadian Navy deadline to receive just one new boat. It has also pitched building maintenance facilities in this country which would employ Canadians.

Hanwha Aerospace, a sister company to the shipyard, has separately put down two detailed proposals to re-equip the army with big, mobile howitzers and rocket-propelled artillery, similar to the U.S.-made HIMAR system. It has also proposed a bigger package of armoured vehicles to fill the gaps the army has in tracked fighting vehicles and defence. 

Those pitches are worth more than $1 billion, depending on what the Canadian government chooses and come with rapid delivery times and the possibility of setting up maintenance — and potentially manufacturing — centres, South Korean defence officials said.

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The proposals represent an unprecedented diplomatic and corporate push to get Canada to buy its military equipment elsewhere than the United States and Europe. 

"We do not think of this as a single, one-time deal between two countries. It's not a transaction for us," Deputy Defence Minister Hyunki Cho told CBC News in a recent translated interview. "If we do succeed in making the sale, then we are going to try and give our effort toward strengthening the capabilities of Canada's defence industry, as well as furthering defence co-operation."

Canada looking at procurement options

The bids were presented at a time when many Canadians — facing the Trump administration's trade war and threats of annexation — have demanded the federal government cancel major military purchases from the United States, including the F-35 fighter program.

The Liberal government of Prime Minister Mark Carney ordered a review of the plan and hinted that Canada may take delivery of the aircraft it has already paid for and look elsewhere to fill the rest of the order. In total, Canada has said it requires 88 advanced fighters. 

While it did not submit a full unsolicited proposal, Korean Aerospace Industries (KAI) has expressed interest in selling Canada its F-50 fighter aircraft as a training jet that could be quickly converted into a combat aircraft. 

South Korea has also begun manufacturing its own stealth fighter in partnership with Indonesia. However, KAI officials have not yet offered it to Canada.

Despite the enthusiasm, there's deep skepticism among South Korean defence and foreign policy officials and observers that Canada is serious about breaking its dependency on the defence-industrial complex of the United States. 

During the recently concluded federal election campaign, Carney repeatedly made clear the relationship with the U.S. had changed irrevocably.

"The old relationship we had with the United States based on deepening integration of our economies and tight security and military co-operation is over," Carney said on March 27 in Ottawa.

The Liberal acknowledged just as the election campaign got underway that it was deep into negotiations to join the European Union's ReArm defence plan — a partnership that would make Canada eligible for joint procurement with allies on the continent.

South Korean defence experts point out that Europe is still figuring out how to re-arm with many defence industries needing to retool and reopen production lines shuttered since the end of the Cold War.

"The supply chain is weak in Europe," Kayla Mijung Kim, of the Korean Institute for Industrial Economics and Trade, told CBC News in Seoul.

"Germany and France, for example, want to make their own weapons systems, but they're constrained. They cannot procure all the defence components they need from European countries. I think they need some time."

Production bottlenecks — an aspect that starkly presented itself as countries rushed to arm Ukraine — have driven some NATO allies to look elsewhere.

Poland is the most dramatic example. 

Since 2022, Warsaw has signed between $16 billion and $22 billion US worth of contracts with South Korean firms. Many of those deals for K2 Black Panther tanks, K9 self-propelled howitzers and K239 Chunmoo multiple rocket launchers have been broken down into tranches. Since then, other deals have followed with Norway, New Zealand, Thailand, the Philippines, Romania and the United Kingdom. 

More recently, Australia jumped on board with a $6.19-billion program to build 129 infantry fighting vehicles, many of them constructed in the Commonwealth country.

South Korea's minister of defence acquisition program administration, Seok Jong-Gun, said the agreement with Poland was the breakthrough in convincing Western allies to consider a source other than traditional armsmakers.

"Prior to the large contract signed with Poland, Korea's reputation as a defence exporter was not that large," he told CBC News in a translated interview. "However, with the signing of a massive contract with Poland and throughout the process of implementing these contracts, many countries have found that Korea is able to supply quality products in a timely manner."

The offers to help set up manufacturing and maintenance facilities have been key in clinching the agreements, Seok said.

Former president Yoon Suk Yeol had made increasing the country's share of defence exports a priority, to the point where South Korea appears on track to be the world's fourth-largest arms manufacturer by 2027.

"We have seen a large and dramatic increase in our export volume in the defence sector" in the last few years, Seok said.

As it stands, the Canadian Army is facing a number of challenges — both overseas and domestically. It has struggled to field equipment to its force in Latvia, including modern anti-tank weapons, air-defence systems and counter-drone technology.

It also lacks mobile artillery and rocket-based artillery, which have been features of the war between Ukraine and Russia. 

The army currently has 47 capital projects on the go, Lt.-Gen. Mike Wright, the country's top soldier, told CBC News in February.

"The army we have now is not the army that we need for the future," Wright said when asked if he was satisfied with the equipping of the troops on the NATO mission in Latvia.

A defence expert said there's not a lot of time to replace key systems.

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"We got here by multiple decades of governments kicking the can down the road, and I think we're at the point now where we have run out of road," said Dave Perry, president of the Canadian Global Affairs Institute. "Our equipment is — in some cases — literally rusting out."

He said the proposal from Seoul, regardless of whether it's unsolicited, deserves serious consideration because it can fill some important gaps quickly, an important consideration since we don't know what a defence-industrial partnership with Europe will look like.

South Korea "is where some of our other allies have looked to quickly fill capability delivery needs in a big hurry. Poland is getting its army rebuilt in large part with South Korean support," Perry said.

"They've got a track record already at being able to provide huge amounts of equipment in very short order. The Canadian Armed Forces is at the point where we have really serious operational readiness deficiencies. We do need to look for options that can fulfil at least some of our acquisition needs quickly."