Another big deal for South Korean defense industry: countdown to the signing of the second batch of Poland's export contract for K2 tanks... The scale of $6.5 billion sets a new record high.

Supply of 180 vehicles... Contract expected to be signed this month.

As one of the top exporters of K defense industry, the second batch of Poland export contract for K2 tanks is expected to be signed this month. This contract with a total scale of 180 vehicles and amounting to 9 trillion Korean won (approximately $6.5 billion or 474 billion Chinese yuan) is likely to set a historical record for the highest export amount of K defense industry, twice the size of the first batch contract signed in 2022 with Poland (approximately 4.5 trillion Korean won, or 237 billion Chinese yuan).

On the 10th, a senior official from the defense industry stated, "The biggest obstacle in the negotiation of the second batch export contract for K2 tanks - the selection of cooperating companies responsible for technology transfer and local manufacturing has been completed and is in its final stages." On the same day, in response to a question at the regular press conference of the Ministry of National Defense about whether the K2 tank contract between South Korea and Poland was nearing signature, Choe Yong-jin, spokesperson for the Defense Acquisition Program Administration, replied, "The execution contract for K2 tanks is undergoing the final negotiation process."

Poland, a neighboring country of the Russia-Ukraine war, chose K defense industry for its short delivery time and excellent performance to rapidly strengthen its national defense capabilities. Previously, both parties signed the first batch contract worth $12.4 billion in 2022 to introduce K2 tanks, K9 self-propelled howitzers, FA-50 light attack aircraft, and other products of K defense industry as a "package", which has further developed into the second batch contract for further imports.

The Lee Jae-myung government signed the largest-ever export contract for K defense industry... and it is expected to develop into a "strategic industry".

It was originally expected that the second contract for K2 tank exports would be signed by the end of last year; however, due to the situation in Poland and the political instability following the emergency martial law, there were delays. Defense industries are highly dependent on national contracts, and the lack of a final decision-making control tower has continued consecutively.

Recently, the final negotiations for signing the contract have been completed, and it is expected to be signed locally by senior officials from both countries as early as this month. With 180 vehicles, the contract amount is approximately $6.5 billion (about 8.9 trillion Korean won), setting a historical record for the highest single defense export contract. The supply quantity is the same as the first batch contract in 2022 (180 vehicles), but the amount has doubled. This is because the improved models in the second batch are more expensive, and also includes technology transfer, MRO (maintenance, repair, inspection) projects.

The previous record of K defense industry was the contract for the medium-range interception missile TAMD II signed with the UAE in 2022, valued at $3.5 billion. In the second batch contract for 180 tanks, approximately 100 units (model K2GF) will be produced and supplied directly by Hyundai Rotem, while the remaining units will be produced locally by Poland's state-owned arms group PGZ after receiving partial technology transfer to produce the improved model (K2PL). The stock price of Hyundai Rotem rose by 10.37% to reach 169,300 Korean won per share (approximately 891 Chinese yuan), setting a new historical high since listing.

This second batch contract for Poland's export of K2 tanks will become the first large-scale defense export contract signed under the Lee Jae-myung government. Although there may be a change in administration, many predict that regardless of the political situation, the K defense industry will flourish as a strategic industry. This is because the Trump administration of the United States repeatedly extended an olive branch to South Korean shipbuilding industry to rebuild its own naval power, and European countries centered around NATO are also increasing their defense spending.

The competitiveness of K defense industry has been proven, and overseas repeat customers continue to place orders. This month 3rd, South Korea Aerospace Industries (KAI) signed an additional export contract for 12 FA-50 aircraft with the Philippine Department of National Defense, amounting to 1 trillion Korean won (approximately 5.26 billion Chinese yuan). This is the second batch export contract following the first batch (12 units) exported in 2014.

President Lee Jae-myung actively emphasized support for the defense industry since he was a candidate. During the election campaign, Lee Jae-myung visited the ADD Defense Science Research Institute and made his election promises, saying, "We will establish a control tower for defense exports, regularly hold presidential-hosted defense export promotion strategy meetings, and turn the Republic of Korea into one of the global defense industry's four major powers."

Source: Chosun Ilbo

Original article: https://www.toutiao.com/article/1834601288331275/

Disclaimer: The article represents the views of the author alone.