Canada is set to select the final contractor this month for its roughly 60 trillion won next-generation submarine procurement program (CPSP), and South Korea has proposed "Project Beaver" to Canada, centered on the local production of hydrogen trucks. As Hanwha Ocean (042660) competes with Germany's ThyssenKrupp Marine Systems (TKMS) for the submarine order, Hyundai Motor (005380) Group's hydrogen vehicles have been deployed as a "secret weapon."
According to Canadian private broadcaster CTV, Kang Hoon-sik, presidential chief of staff who visited Canada as a special presidential envoy, said in an interview with CTV that if Korea wins the submarine order, 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 through Project Beaver would be a Korean brand, but they would be made in Canada with Canadian raw materials," Kang said. "If we win the submarine order, Hyundai Motor will help build Canada's hydrogen industry ecosystem."
Reporting the project's details, CTV said Korea plans to build a hydrogen liquefaction plant in British Columbia starting in 2030 and construct 32 hydrogen refueling stations nearby. The core element, a hydrogen freight truck production plant, is reportedly most likely to be built in Ontario. After 2035, Korea plans to build 160 additional stations across Canada, securing a total of 192 infrastructure sites. CTV also reported that there is a possibility of jointly producing hydrogen trains currently being tested in Korea with Canada and exporting them to third countries.
A Hyundai Motor official said, "We are exploring hydrogen business opportunities in Canada, but nothing has been finalized."
The CPSP is a program to acquire 12 submarines of the 3,000-ton class to replace the Canadian Navy's aging submarines.
Offering Hydrogen Mobility as New Engine to Canada Seeking Auto Plants
"Project Beaver," unveiled in Canada by special presidential envoy and Chief of Staff Kang Hoon-sik, can be seen as Korea's trump card in responding to the 60 trillion won Canadian submarine procurement competition.
The Canadian government initially narrowed the submarine project candidates to Hanwha (000880) Ocean and Germany's TKMS, then demanded investment in its domestic auto industry in return for the order. Canada was known to have hoped Korea's Hyundai Motor would invest in a completed-vehicle plant.
However, with Canada's auto market not large enough to justify establishing a local plant and the burden increased by U.S. tariffs, building a new completed-vehicle plant was a difficult option. Korea therefore shifted course toward "energy and hydrogen cooperation," proposing hydrogen freight truck production and refueling infrastructure as an alternative to a completed-vehicle plant. With the precedent of Hyundai Motor's withdrawal from its Bromont plant in 1993, Korea sought differentiation by presenting a "hydrogen industry ecosystem linking production, refueling, and mobility" as a new growth engine for Canada's auto industry, rather than an investment of uncertain profitability.
Indeed, during the Canadian itinerary, Kang and the Hyundai Motor officials in the envoy delegation held hydrogen and energy cooperation forums in Toronto and Ottawa and met with the minister of natural resources, and notably presented the hydrogen industry development blueprint that Hyundai Motor has been preparing at home and abroad.
The hydrogen truck proposal adds to the local production cooperation on armored vehicles and self-propelled howitzers that Hanwha signed with Canada's Automotive Parts Manufacturers' Association (APMA). Hanwha proposed locally producing the K9 self-propelled howitzer and the Chunmoo multiple rocket launcher, bestsellers of Korea's defense industry, reading the intent of Canadian Prime Minister Mark Carney's government, which is focused on strengthening security sovereignty.
In addition, Korea has recently offered "space launch vehicle technology support." Glenn Copeland, CEO of Hanwha Defense Canada, said in an 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."
Canada currently has no operating launch pads or launch vehicle operators, and it relies on overseas firms even to launch its own satellites. Since Canada had earlier decided to use Canadian steel—hit by U.S. tariffs—in submarine construction, the proposals Korea has presented in this competition are seen as encompassing the entire range of industries where Canada needs to strengthen capabilities.
Regarding the Canadian Patrol Submarine Project (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 a selection of a submarine contractor but has the character of selecting an 'economic and security cooperation partner.' Since the outcome hinges on how Canadian regions, companies, and institutions perceive and regard Korea, 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 from 2026 to 2044 and generate $96.3 billion in GDP value-added.
Germany is also waging an all-out final push. According to foreign media, German Defense Minister Boris Pistorius recently said at a Canadian defense expo that "on the premise of winning the CPSP, the German government and shipyards will invest in various projects across Canada, generating $86 billion in GDP creation effects." The German side is emphasizing that it will execute a significant portion of the initial investment within one to two years of the final decision.
Caught between Korea's "Indo-Pacific supply chain solidarity" and Germany's "NATO-centered Arctic defense solidarity," the Canadian government plans to announce the final winner within this month. Only one of Hanwha Ocean's "Jangbogo-III Batch-II" and TKMS's "212CD" will come out smiling.
