Hanwha Aerospace nears $276 million K9 howitzer deal with Vietnam

South Korea’s Hanwha Aerospace Co. is close to signing a 400 billion won ($276 million) deal to export as many as 30 units of the K9 Thunder self-propelled howitzers to Vietnam, industry sources said on Monday.

Hanwha is in the final stages of negotiations with the government of Vietnam to determine the timing of delivery and other terms, people familiar with the matter said.

The volume will likely be set at between 20 and 30 units and the export deal is estimated at up to 400 billion, given that a K9 howitzer is priced at between 14 billion won and 20 billion won each, sources said.

If a deal is signed, it would mark Vietnam's first procurement of Korean-made weaponry.

In February 2023, Vietnam’s defense ministry visited Korea to evaluate the K9 Howitzer Thunder for a possible acquisition.

Discussions gained momentum last November when Vietnamese military personnel received training on operating, firing and maintaining K9 howitzers.

PRIMARY REASON BEHIND VIETNAM’S MOVE

Industry watchers said the chief reason behind Vietnam’s interest in the K9 howitzer is its ongoing territorial dispute with China — aligned with moves by the Philippines, which plans to acquire 12 FA-50 fighter jets from Korea Aerospace Industries Ltd. (KAI) in the first half of this year.

Both Vietnam and the Philippines face tensions with China over territorial claims in the South China Sea. While naval and air forces are crucial in the region, Vietnam is also reinforcing its land forces as it shares a border with China.

Analysts said the US government’s engagement strategy with Vietnam is also playing a role.

As part of its efforts to keep China in check, the US is known to be considering expanding the Quad, or Quadrilateral Security Dialogue, an informal security group comprising the U.S., India, Australia and Japan, to also include South Korea, Vietnam and New Zealand.

NEXT TARGET: MIDDLE EAST

If the deal is finalized, Vietnam would become the 11th country to operate the K9 howitzer.

Since 2001, Hanwha has exported K9 howitzers to countries such as Turkey, Poland, Finland, India, Norway, Estonia, Australia, Egypt and Romania.

Industry officials said any K9 sales deal would lead to more exports of the weapon.

India, which initially purchased 100 units of the K9 howitzers in 2017, recently placed an order for another 100 units.

Finland, which signed a deal to buy K9 howitzers from Hanwha in 2017, purchased 10 additional units in 2021. Norway, which signed a similar deal in 2017, bought four more Hanwha howitzers in 2022.

Hanwha Aerospace has sold about 1,300 K9 howitzers globally to date, capturing over 50% of the world's self-propelled howitzer market.

The company expects additional profits by selling 155 mm ammunition for the K9.

The installation of domestically produced engines made by STX Engine Co. in the K9 howitzer since September is also expected to help Hanwha increase its exports, industry officials said.

Previously, the K9 used engines made by Germany’s MTU Aero Engines, which required Hanwha to obtain German government approval for its K9 exports.

Such a restriction led to the cancellation of Hanwha’s K9 export deal to the United Arab Emirates in 2020 due to Germany’s ban on arms exports to the Middle East.

With the availability of domestically made K9 engines, Hanwha is now looking to the Middle East as its next target market.

Hanwha plans to soon begin mass production of K9 howitzers equipped with Korean engines for Egypt, as part of a 2022 contract. Other Middle Eastern nations are also considering acquiring the K9 howitzer, sources said.

Write to Hyung-Kyu Kim and Hyun-Il Lee at khk@hankyung.com

In-Soo Nam edited this article.