S.Korea’s defense exports to top $10 billion
Wins $3.5 billion UAE missile system deal; targets howitzer, armored vehicle, light fighter aircraft, tank contractsBy Kyung-Min Kang, Jeong Min Nam and Young Chan Song Jan 17, 2022 (Gmt+09:00)
Korea’s defense companies emerge as coveted growth stocks
Hanwha Defense to supply howitzers to Australia in $788 mn deal
Korea’s LIG close to record $3.5 bn deal to export missile system to UAE
The country exported about $7 billion of military equipment in 2021, far exceeding an earlier forecast of $5 billion.
The overseas sales are expected to top $10 billion this year with hopes for more major supply contracts with the Middle East, Europe and Australia.
$3.5 BILLION JACKPOT TO EXPORT MISSILE SYSTEM TO UAE
LIG Nex1, Hanwha Defense Co. and Hanwha Systems Co. on Sunday agreed with the United Arab Emirates (UAE) Tawazun Technology and Innovation (TTI) to supply their mid-range surface-to-air missile (M-SAM) system to the Middle East country.
The size of the deal was known to be at $3.5 billion, the largest single arms contract ever for South Korea. LIG Nex1 and Hanwha System on Monday announced they have secured a 2.6 trillion won ($2.2 billion) contract and a 1.3 trillion won deal related to the export of the weapon, known as Cheongung II in Korean, or heaven’s bow.
The M-SAM boasts improved maneuverability with a “hit-to-kill” capability against ballistic missiles. It is designed to intercept targets at a range of 40 kilometers and an altitude of up to 15 kilometers. A missile of the system with a length of 4 meters and a weight of 400 kilograms costs 1.5 billion won.
A battery consists of a mobile multi-function radar, a command post vehicle and three launch vehicles. Hanwha Defense Co. said it secured a 390 billion won deal to supply launchers and transport vehicles for Cheongung II, while Hanwha System was slated to make the radar.
LIG Nex1 began mass-producing Cheongung II in 2018 after five years of development and delivered the system to the Korean Army in November 2020 for field deployment.
LIG Nex1 CEO Kim Ji-chan, Hanwha System CEO Eoh Sung-chul and Hanwha Defense CEO Son Jae-il actively worked on the deal in the UAE along with South Korea’s Defense Acquisition Program Administration (DAPA).
RAPIDLY GROWING K-DEFENSE
South Korea’s defense exports have been rapidly growing. The country’s overseas sales of military equipment were around $3 billion a year from 2010 to 2020, according to the DAPA.
But major deals such as Hanwha Defense’s $788 million contract to supply K9 self-propelled howitzers to Australia in December ramped up the exports to $7 billion in 2021, helping exports exceed imports for the first time, according to the DAPA.
Strong performance with low price tags, thorough warranties and active marketing activities attracted more customers, industry sources said.
“A weapon with excellent performance cannot help losing competitiveness if it is expensive,” said an industry source. “For a weapon system such as Cheongung II that is used for decades, warranties cost more than purchases itself.”
South Korea’s defense makers such as LIG Nex1, Hanwha and KAI are considered to be superior to foreign competitors in warranties such as parts supplies and repairs.
MORE DEALS FROM MIDDLE EAST, EUROPE, AUSTRALIA
The government and the industry expected defense exports to top $10 billion this year, hoping to win more major deals with other countries.
Kang Eun-ho, the Minister of DAPA, said other countries were also in talks for Cheongung II.
The M-SAM is not the only weapon for South Korea to export.
Hanwha Defense is in talks with Egypt to sell the K9 self-propelled howitzer developed with South Korea’s Agency for Defense Development.
“We are doing our best,” Kang told reporters when asked if South Korean President Moon Jae-in, who is currently in the UAE, is scheduled to have any defense-related events when he visits Saudi Arabia and Egypt.
Hanwha Defense’s AS-21 Redback armored vehicle is also competing with Germany’s Rheinmetall Defence Electronics GmbH. as the final contender for Australia’s LAND 400 phase 3 project designed to introduce next-generation infantry fighting vehicles (IFVs).
KAI is trying to sell domestically developed FA-50 light fighter aircraft to Latin American countries including Colombia. Governments in the region are expected to procure some 60 light fighter aircraft in total in $3 billion deals.
Hyundai Rotem is also devoting all its energy to winning Norway’s next-generation tank deal with the K-2 Black Panther Main Battle Tank.
Write to Kyung-Min Kang, Jeong Min Nam and Young Chan Song at
LIG Nex1's mid-range surface-to-air missile (M-SAM) Cheongung II South Korea’s defense exports hit a record last year as key local makers such as LIG Nex