S.Korea defense firms poised to ink $7.7 bn in deals with Poland

South Korea’s defense makers including Hyundai Rotem Co., Korea Aerospace Industries Ltd. (KAI) and Hanwha Defense are poised to clinch 10 trillion-won ($7.7 billion) export deals with Poland later this month, adding to hopes that the industry will expand their market presence across Europe and the Asia-Pacific.

The Polish government has been in talks about long-term supplies of Hyundai Rotem’s K2 Black Panther, a next-generation main battle tank, KAI’s FA-50 light fighter aircraft and Hanwha’s K9 self-propelled howitzers, according to South Korea’s presidential office and defense industry sources on Tuesday.

Senior officials from the country that shares its borders with Ukraine as well as the Russian enclave of Kaliningrad were known to have recently discussed export volumes, prices and timing with executives of those defense makers.

“They are likely to sign business agreements sequentially in forms of MOUs (memorandums of understanding) or MOAs (memorandums of agreement) from as soon as the end of this month,” said a senior South Korean government official. “Prices of each product, delivery timing and others may vary during the negotiation process.”

Poland has been speeding up steps to import South Korean weapons amid increasing demand due to Russia’s invasion of Ukraine. The North Atlantic Treaty Organization (NATO) member country has sent its MIG-29 warplanes to Ukraine in support of its government.

BATTLE TANKS, LIGHT FIGHTER JETS, SELF-PROPELLED HOWITZERS

Among the defense producers, Hyundai Rotem was in talks to supply 180 units of K2 Black Panther in a 3 trillion-won deal. The company whose top shareholder is the country’s top automaker Hyundai Motor Co. also discussed selling 400 more units of the battle tanks by 2030.

KAI sought to export 48 FA-50s. The military aircraft manufacturer reportedly was in talks to deliver eight of the light fighter jets to Poland among 20 units supposed to be supplied to South Korea’s Air Force this year.

The size of the contract was expected to top 3 trillion won, given the aircraft’s price tag of 50 billion won per unit, as well as parts supplies and after-sales service.

Hanwha aimed to sell 670 units of K9 self-propelled howitzers in a deal that was estimated to be worth more than 4 trillion.

Those defense makers also discussed measures to adjust their products for local conditions in cooperation with Polish companies.

In May, Polish Defense Minister Mariusz Blaszczak visited plants of Hyundai Rotem, KAI and Hanwha in South Korea to check products.

South Korean President Yoon Suk-yeol and Polish President Andrzej Duda discussed cooperation in the defense sector on June 29 during the NATO summit in Madrid.

K-DEFENSE GATHERS MOMENTUM

South Korea expects the local defense sector to become another export engine, given the increasing global geopolitical tensions such as a new cold war between the US and China.

The country’s defense makers are targeting other deals such as Norway’s next-generation battle tank order worth $1.7 billion, Australia’s multi-billion-dollar infantry fighting vehicle (IFV) project, as well as Malaysia and Colombia’s plans to buy light fighter jets in deals of more than $1.7 billion.

South Korea is predicted to grow into the world’s third-largest defense exporter in the next five years from No. 10 as of end-2021, industry sources said.

“Local defense makers are popular for offering bang for the buck and providing thorough after-sales support in the global market,” said one of the sources. “Demand for South Korean weapons among other countries will quickly grow.”

Write to Dong-Wook Jwa and Ik-Hwan Kim at leftking@hankyung.com
Jongwoo Cheon edited this article.