Hanwha poised to secure Australian armored vehicle deal

Hanwha Aerospace Co. has taken a step closer to clinching an Australian armored vehicle supply contract as the government chose the South Korean defense maker as the preferred bidder for its multi-billion-dollar project to buy new troop carriers, according to the company. 

“We were selected as the preferred negotiator for Australia’s LAND 400 Phase 3 project to purchase infantry fighting vehicles (IFVs),” the subsidiary of the chemicals-to-defense conglomerate Hanwha Group said on Thursday in a filing to South Korea’s financial regulator.

Meawnhile, Australia media are reporting that the the company won the deal.

Hanwha Aerospace said the company was set to supply 129 units of the Redback, named after the Australian redback spider, which features state-of-the-art technologies such as tech sensor systems. Further details such as prices and delivery schedules have yet to be finalized, according to the company.

Australian Minister for Defence Industry Pat Conroy said the Land 400 Phase 3 project will have a value of between A$5 billion ($3.4 billion) and A$7 billion, one of the country’s largest capability acquisitions, according to the Australian Defence Magazine (ADM).

Hanwha Aerospace’s shares surged as much as 19.1% to a record high of 151,000 won ($118.8) in South Korea’s main stock market, as Australian media reported the Commonwealth Government has decided to procure the armored vehicles from the company.

DONE DEAL

"The Albanese Government has selected Hanwha Defense Australia as the preferred tenderer to deliver 129 infantry fighting vehicles to the Australian Army, as part of a major transformation of the Army in response to Australia’s changing strategic environment," Conroy was quoted as saying by the ADM. The Albanese government is the federal executive government of Australia.

The project had been originally valued at A$10 billion for 450 IFVs but the government reduced it to a deal for 129 units in April after a strategic review.

The Australian Financial Review on Wednesday said Hanwha Aerospace beat German rival Rheinmetall AG after a five-year tender process to seal the deal to build 129 IFVs. Hanwha Aerospace’s Redback has been competing against Rheinmetall's Lynx armored vehicle for the deal.

Cabinet’s national security committee made the decision on Tuesday, with the Korean and German governments and the bidders contacted on Wednesday, according to the business-focused daily newspaper. The decision could be announced as early as Thursday, the media added.

Hanwha Aerospace said it plans to produce the IFVs at its facilities under construction in Geelong, the second-largest city in Victoria, once it finalizes the deal.

The company, which merged with its group affiliate Hanwha Defense Co. last year, started building its first overseas plant there in April 2022 to manufacture artillery systems after winning a $788 million deal to supply K9 self-propelled howitzers to the country.

BETTER PERFORMANCE

Hanwha Aerospace secured the armored vehicle contract even though its offer came in higher than Rheinmetall’s given the higher performance rating of Redback versus the Lynx, according to The Australian, the only daily newspaper distributed nationally in the country.

Rheinmetall was initially expected to win the deal as the German automotive and arms maker is already producing the Boxer, a multirole armored fighting vehicle in Australia.

The country also agreed to sell 100 Boxer combat reconnaissance vehicles built in Queensland to Germany at $1 billion in Australia’s largest defense export deal.

The decision to buy the Redbacks puts Berlin's offer in doubt, the Australian Broadcasting Corp. said.

Write to Jae-Fu Kim at hu@hankyung.com
 
Jongwoo Cheon edited this article.