South Korea has proposed "Project Beaver," centered on local production of hydrogen trucks, to Canada, which is set this month to select the final contractor for its Canadian Patrol Submarine Project (CPSP), worth some 60 trillion won. As Hanwha Ocean (042660) competes with Germany's ThyssenKrupp Marine Systems (TKMS) for the submarine deal, Hyundai Motor (005380) Group's hydrogen vehicles have been deployed as a "secret weapon."
According to Canadian private broadcaster CTV on the 4th, Kang Hoon-sik, Presidential Chief of Staff, who visited Canada as a presidential special envoy, said in an interview with CTV that if South Korea wins the submarine contract, it would invest more than $3.1 billion in Canada to develop the hydrogen truck industry and create 9,000 jobs. "The hydrogen trucks produced under Project Beaver are a Korean brand, but they will be made in Canada with Canadian raw materials," Kang said. "If we win the submarine contract, Hyundai Motor will help build Canada's hydrogen industry ecosystem."
According to project details obtained by CTV, the first phase would see a hydrogen liquefaction plant built in British Columbia from 2030, along with 32 hydrogen charging stations nearby. The key cargo hydrogen truck production plant is most likely to be built in Ontario. After 2035, an additional 160 charging stations would be set up across Canada, bringing the total infrastructure to 192 sites, while hydrogen trains currently being tested in South Korea could be jointly produced with Canada and exported to third countries, CTV reported.
In response, a Hyundai Motor official said, "We are exploring hydrogen business opportunities in Canada, but nothing has been finalized."
The CPSP is a project to secure 12 submarines of the 3,000-ton class to replace the Canadian Navy's aging submarines.
Hydrogen Mobility Presented as New Engine to Canada, Which Demanded a Vehicle Plant
"Project Beaver," announced in Canada by Presidential Chief of Staff Kang Hoon-sik, the presidential special envoy, can be seen as South Korea's final weapon in responding to Canada's 60-trillion-won submarine contract battle.
The Canadian government had initially narrowed the submarine project candidates down to Hanwha (000880) Ocean and Germany's TKMS, then demanded investment related to its domestic automotive industry as compensation for the contract. Specifically, it is reported to have sought additional investment from Korea's Hyundai Motor in the form of a vehicle plant and from Germany's Volkswagen in the form of a battery production facility.
However, building a new vehicle plant was a difficult option, given that the Canadian auto market is not large enough to justify establishing a local plant and that the burden has grown due to U.S. tariffs. In response, South Korea turned the helm toward "energy and hydrogen cooperation," presenting hydrogen cargo truck production and charging infrastructure construction as an alternative to a vehicle plant. Mindful of the precedent of Hyundai Motor's withdrawal from its Bromont plant in 1993, South Korea sought to differentiate itself by putting forward the building of a "production-charging-mobility-linked hydrogen industry ecosystem" as a new growth engine for the Canadian auto industry, rather than an investment with uncertain profitability.
Indeed, during their Canadian itinerary, Kang and officials from Hanwha Ocean, HD Hyundai Heavy Industries (329180), and Hyundai Motor, who were part of the special envoy delegation, held hydrogen and energy cooperation forums in Toronto and Ottawa and met with the Minister of Natural Resources, with Hyundai Motor in particular taking time to introduce the blueprint for hydrogen industry development it has been preparing at home and abroad.
The hydrogen truck card was added on top of the cooperation Hanwha signed with Canada's Automotive Parts Manufacturers' Association (APMA) for local production of armored vehicles and self-propelled howitzers. Building local production bases for the K9 self-propelled howitzer and the Chunmoo multiple rocket launcher—best-sellers of K-defense—was a strategy that read the Canadian government's intent to firm up its security sovereignty by strengthening its domestic defense supply chain.
On top of this, "space launch vehicle technology support" was recently presented as well. Glenn Copeland, CEO of Hanwha Defence Canada, said in a recent interview with Bloomberg that "Hanwha Aerospace will establish a joint venture with a Canadian commercial spaceport operator and provide rocket technology to accelerate Canada's own launch capabilities."
Currently, Canada has no operating launch pads or launch vehicle operators, and depends on overseas companies such as SpaceX even when launching its own satellites. Given that Canadian steel—which was hit by U.S. tariffs—had already been decided for use in the submarine construction, analysts say the cards South Korea has presented in this contract battle span the entire range of industries in which Canada needs to build up its capabilities.
In addition, regarding the CPSP, Hanwha has signed a total of 75 memorandums of understanding (MOUs) with local companies and institutions. An industry official said, "The CPSP is not simply about selecting a submarine contractor, but has the character of selecting an 'economic and security cooperation partner.'" "Since Canadian regions, companies, and institutions' perceptions and reputation of South Korea will determine the outcome, strategic relationship-building is essential," the official added.
According to an analysis by global accounting firm KPMG, if the projects proposed by Hanwha Ocean go ahead, they are estimated to create 430,000 jobs in Canada from 2026 to 2044 and generate $96.3 billion in gross domestic product (GDP) added value.
Germany is also waging an all-out final battle. 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 an $86 billion GDP effect." The German side has stated it will execute a significant portion of the initial investment within one to two years after 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" and TKMS's "212CD"—will come out smiling.
