By Nathaniel England*
Canada’s decision to select Europe’s TKMS to replace its Victoria-class submarines has created a golden opportunity for Australia. South Korea’s Hanwha Ocean is now available to quickly replace the ageing Collins-class fleet, providing Australia with a safer and more resilient transition to SSN-AUKUS.
Australia’s transition to conventionally-armed but nuclear-powered submarines (SSNs) is increasingly exposed to three interconnected risks.
Questions remain over whether SSN-AUKUS can be delivered on schedule given recent United Kingdom (UK) industrial/investment concerns, whether the United States (US) will ultimately agree to transfer up to three used Virginia-class SSNs given its own low production rates and naval force requirements, and whether the planned Life of Type Extension (LOTE) can truly sustain Australia’s existing Collins-class fleet until the SSN-AUKUS hand-over occurs in the 2040s.
Of these interconnected AUKUS risks, the most fundamental, pressing, and the one Australia actually has control over – is the ageing Collins fleet.
The most important step Canberra can take to avoid the growing risk of a “capability gap” is urgently finding a suitable replacement for the Collins fleet until SSN-AUKUS eventually arrives. Canada’s recent submarine contractor selectionunexpectedly provides Australia with an opportunity to do exactly that.
Rather than repeating another multi-year international submarine tender, which previously culminated in the Attack-class cancellation, Australia should leverage Canada’s recent assessment of the world’s leading exportable conventionally-powered submarines (SSKs). That competition already narrowed the field to two highly capable designs meeting demanding technical requirements. There is little strategic value in repeating a process that Canada has, in effect, already undertaken.
The real significance of Canada’s decision for Australia lies in the supplier it did not select.
South Korea’s Hanwha Ocean presented a highly competitive proposal centred on its flagship Jang Yeong-sil-class (KSS-III Batch II) submarine. Unlike Canada’s Arctic/NATO-focused Type 212CD selection, the KSS-III aligns much more closely with Australia’s Indo-Pacific deterrence requirements.
If South Korea was prepared to build them for Canada, could it not build them for Australia instead?
In fact, Hanwha Ocean already offered the KSS-III to Australia back in 2022, framing it as a means of replacing Collins while deepening ties between Seoul and Canberra. At the time, however, Canberra had only just committed to AUKUS, and there appears to have been little political appetite to explore alternative arrangements. Australia’s circumstances today are fundamentally different.
The KSS-III would represent a modern conventional “like-for-like” replacement for Collins in both fleet size and crew numbers. It incorporates advanced lithium-ion battery technology, air-independent propulsion, and a unique vertical launch system (VLS) capable of firing long-range missiles for both anti-ship and land-attack. While it cannot replicate the speed, endurance, or global reach of an SSN, Australia’s defence strategy since the 2023 Defence Strategic Reviewhas prioritised “deterrence by denial” focused on Australia’s “northern approaches” – a role that a modern interim fleet of six KSS-IIIs would be very well suited to.
Based on Hanwha Ocean’s proposal to Canada, Australia could expect the first submarine delivered within less than six years from contract signature, followed by one submarine each year thereafter. If a contract was signed by the end of this year, that delivery profile would allow the entire Collins fleet to be replaced by 2038, a decade before the final Collins submarine is now expected to retire.
There is also a financial rationale for acting sooner. Australia has recently committed up to $11 billion AUD over the next decade to sustain the Collins-class fleet for transitioning to SSN-AUKUS – this was recently descoped and found to still be significantly more costly than in 2023. Under the current “Optimal Pathway,” that investment pushes the Collins-class to remain in service into the 2040s, a decade beyond its originally intended retirement.
Introducing KSS-III from the early-2030s would create an opportunity to substantially reduce the scope of Collins LOTE – allowing a significant portion of that allocated funding to be redirected towards purchasing its replacement. As new submarines enter service, investment, workforce, infrastructure and industrial capacity would shift from maintaining Collins towards constructing its successor.
Canberra should also seek a split-yard build arrangement where practical, leveraging South Korea’s mature shipbuilding industry and active submarine production lines to accelerate delivery while expanding Australia’s own construction capacity. Such an approach would diversify supply-chains and further develop Australia’s sovereign submarine industry at both Henderson and Osborne.
Beyond its industrial benefits, such an agreement would provide an exceptional opportunity to deepen Australia’s relationship with South Korea, further strengthening cooperation between two like-minded Indo-Pacific middle-power democracies.
Given the urgency, Canberra should recognise the rationale for direct government-to-government engagement. Australia pursued AUKUS directly with its partners rather than through a typical tender process; the same precedent should now apply to an interim conventional fleet.
This is not an alternative to AUKUS – it is a more resilient pathway to getting there.
Defence’s long-term objective of constructing and eventually operating SSN-AUKUS should remain unchanged for now given the commitments. However, replacing Collins a decade earlier reduces the Royal Australian Navy’s (RAN) dependence on Collins LOTE while mitigating the risks associated with both the Virginia transfers and SSN-AUKUS delays. That, in turn, eases pressure on Australia’s AUKUS partners, allowing them to focus on addressing the industrial constraints contributing to those same risks currently undermining AUKUS Pillar I.
The proposed transfers of three used Virginia-class Block IV submarines would retain their intended value should they ultimately proceed. If Washington delivers them as planned, Australia begins operating SSNs earlier, providing valuable nuclear propulsion and inter-operability experience before SSN-AUKUS arrives. If Virginia transfers are delayed, reduced, or do not eventuate – an increasingly likely scenario – then Australia is no longer solely dependent on the US to avoid its own capability gap. Moreover, it will have a significantly better conventional submarine fleet compared with what it would otherwise operate through the 2030s and 2040s.
Likewise, if SSN-AUKUS enters service broadly as planned, Defence can decide whether to retain a mixed fleet of SSKs and SSNs or progressively transition towards an all-SSN force. If SSN-AUKUS is delayed – an increasingly likely scenario – then the RAN possesses a modern conventional submarine fleet that continues to provide valuable deterrence and adversarial uncertainty during this period.
A KSS-III fleet acquired during the 2030s would likely reach replacement age in the 2060s, precisely when Australia already plans to construct an additional three SSN-AUKUS submarines. Instead of deciding today that every SSK must eventually be replaced by an SSN, Defence could reassess the appropriate balance between SSKs and SSNs when those replacement decisions actually arise. A mixed fleet may ultimately represent better long-term value for money by allowing the RAN to maintain, or even expand, its overall fleet size, without necessarily replacing every conventional submarine with an extremely expensive SSN-AUKUS.
Although introducing KSS-IIIs may increase additional complexity during the 2030s, Australia’s current transition already requires the RAN to manage three classes (Collins, Virginia and SSN-AUKUS) simultaneously in the 2040s. Replacing Collins with KSS-III earlier does not fundamentally alter that challenge, it replaces an ageing conventional fleet with a modern one while the nuclear-powered enterprise develops separately. Moreover, should the Virginia transfers not ultimately proceed, this proposal would leave the RAN operating only two classes of submarines at any one time.
More importantly, this pathway is considerably less risky than allowing an over-extended Collins fleet to become the single point of failure in the 2030s or 2040s – a costly submarine capability gap that undermines the very rationale for pursuing AUKUS in the first place.
For now, Canada’s submarine fleet decision has created a rare strategic opportunity to rescue Australia’s AUKUS transition. Canberra should now urgently engage South Korea and Hanwha Ocean before their available production capacity is committed elsewhere.
*Nathaniel England is an Australian doctoral student at the University of Warsaw and has previously lectured on Indo-Pacific geopolitics at Civitas University (Poland). His research currently focuses on the inter-regional relationship between Europe and the Indo-Pacific.
Comment by Peter Leavy, President of the ANI:
The ANI serves as a forum for debate and discussion on naval and maritime affairs affecting Australia. AUKUS Pillar 1 – the RAN’s acquisition of conventionally armed, nuclear-powered submarines- has certainly generated that discussion, not only within the ANI but more broadly across the media. While much commentary against AUKUS Pillar 1 is based on the same ideas (“the US won’t transfer Virginias”, cost, crews, French SSNs, transition challenges, etc) Nathaniel England has provided a useful contribution based on Canada’s recent decision on their new submarine class.
While we welcome such discussion, I might offer some challenges in pursuing Korean SSKs, as Nathaniel proposes. A key element is the commencement of another submarine program, to be run concurrently with those already underway. A key requirement of any continuous ship-building program is to have as much commonality as possible, and, with the RAN fleet already comprising designs from multiple countries (including Japan shortly), adding yet another country’s designs into an already very heterogeneous fleet will severely compound the supply, training, and language issues the RAN already faces. The challenges of operating Collins, Virginia, and SSN AUKUS are already significant – adding a Korean submarine into the mix will exacerbate those challenges significantly, even if it allows the Collins Class to be fully decommissioned before the first SSN AUKUS arrives. We will need to transition to a single class of submarine as quickly as possible, so building new conventional submarines that will have 20-30 years of life ahead of them will compound the challenges of multiple classes.
Resourcing will also be a major issue. The cost of AUKUS is significant and already runs the risk of distorting the ADF’s force structure if sufficient additional funding is not forthcoming in the years ahead. Commencing what would be another major project (likely only surpassed in complexity and cost by AUKUS) will incur tremendous costs in resources and staffing and force the ADF (not just the RAN) to become very “submarine heavy” in resource allocation and funding. While submarines, and SSN’s in particular, are very powerful naval capabilities, they cannot do all that a navy needs to do, so drawing more resources away from surface combatants, aviation, mine warfare, sustainment etc (not to mention the Army and RAAF) will have second-order impacts that must be fully understood.
The ANI welcomes original input into our pages, and I thank Nathaniel for taking the time to put pen to paper, especially in light of a major new development in allied submarine capabilities.
