Warship builder TKMS is in talks with Norwegian and German companies to offer a multi-billion-dollar investment package to Canada in a fiercely competitive submarine tender, its CEO said, seeking to beat a rival South Korean bid.
The talks go beyond submarines and cover possible investment commitments in rare earths, mining, artificial intelligence and battery production for the automotive sector, Oliver Burkhard told Reuters.
The previously unreported investment package plan could boost TKMS as it vies to win the tender after being short-listed last year along with South Korea's Hanwha Ocean to supply up to 12 state-of-the-art submarines to Canada's navy.
It reflects intensifying efforts by Germany to strengthen defence cooperation in the face of rising geopolitical tensions, with the US seeking to claim Greenland and threatening to impose new import tariffs on European allies while Russia continues its war in Ukraine.
Burkhard said TKMS was in discussion with German space startup Isar Aerospace about the investment initiative but did not name the other companies involved in the talks. The submarine order alone is estimated to be worth more than €10 billion ($12 billion), according to industry sources.
The total package could be worth significantly more depending on investment pledges from other sectors, according to people briefed on the discussions.
"It is no longer just about the submarines. It is primarily about what's beyond," Burkhard told Reuters on the sidelines of an event in Frankfurt, adding the aim was a "broad economic package" to convince the Canadian Government of its offer.
TKMS is the world's largest maker of non-nuclear submarines and accounts for around 70 per cent of NATO's conventional fleet. Burkhard said TKMS was asking possible partners about foreseeable investment decisions in Canada and whether to include them in so-called offset obligations, or mandatory financial commitments, which are made over 30 years.
"Of course that also includes the defence sector," he said. Canada, which has the longest coastline in the world, has said plans to buy new submarines were aimed at maximising economic benefits as part of its defence strategy.
Burkhard, who will make his next trip to Canada in March for more talks, said Germany's economy and defence ministries as well as the Chancellery were also part of the discussions, adding he expected Canada to make a decision in 2026.
Germany's economy ministry referred Reuters to the defence ministry which said it did not comment on confidential consultations as a matter of principle.
Germany's Chancellery and Canada's economy and defence ministries did not immediately respond to requests for comment. Hanwha Ocean declined to comment.
TKMS, which Burkhard said had between 30 and 40 staff working on the offset obligation package, is offering its 212CD class submarine as part of the tender. It is also supplying this vessel to Norway's navy under a joint modernisation initiative.
(Reporting by Christoph Steitz and Tom Kaeckenhoff; Additional reporting by Hyunjoo Jin and Joyce Lee in Seoul, Andreas Rinke in Berlin and David Ljunggren in Ottawa; Editing by Adam Jourdan and Emelia Sithole-Matarise)
