German Finance Minister Lars Klingbeil talked up the importance of a potential submarine deal with Canada on Friday.

"The entire federal government is campaigning to ensure that cooperation with Canada goes ahead," he said on Friday in Wismar, where the naval shipbuilder TKMS has a site which would be used to build the submarines for Canada should the hoped-for contract be awarded.

"The arguments ... are very much in our favour," Klingbeil said, pointing to the high-quality production Germany can offer.

TKMS chief executive Oliver Burkhard said, "we believe we have a good chance of winning the contract." He cited, for example, interoperability between NATO partners as a key argument - that is, the ease of cooperation between the navies of different countries.

TKMS is one of the world's leading companies in the construction of non-nuclear-powered submarines, and is currently building six of the new Type 212CD class for both Germany and Norway, a model in which the Canadians are also interested.

Burkhard said the potential contract from Canada would be "the largest ever awarded in the world of conventional submarines to a NATO partner." According to earlier reports, the contract involves the construction of up to 12 vessels.

Construction at the Wismar site is progressing well, Burkhard said. He said the pressure hull assembly line, which represents an investment of over €100 million ($114 million), is currently undergoing trial runs.

Work is due to begin in Wismar in September, both on the construction of the new research icebreaker Polarstern and on submarine production "for a South-East Asian country which I am not at liberty to name, but which is a city-state," as Burkhard put it.

The Singapore Navy has already had submarines built by TKMS and has ordered further vessels.