South Korea’s Hanwha AeroSpace Co. announced on Monday that it has signed a second contract worth 3.45 trillion won ($2.66 billion) with Poland’s Armament Agency for additional exports of its K9 self-propelled howitzers.

The contract volume is equivalent to 52.7 percent of the company’s total sales in 2022.

The aerospace company signed a framework deal with the Polish Armaments Agency to export 672 K9 howitzers and 288 Chunmoo multiple launch rocket launchers in July 2022 and then inked the first contract to deliver 212 K9 howitzers and 218 Chunmoo launchers in August and November that year respectively.

The second contract covers the delivery of 152 K9 howitzers, part of the remaining 460, sequentially until 2027, subject to the conclusion of financial arrangements.

Under the contract, Hanwha AeroSpace will supply Poland with 155-millimeter artillery ammunition for K9 self-propelled howitzers and integrated logistics support (ILS) for K9 maintenance and cooperate in the local production of K9 maintenance parts.

Initially, domestic defense firms such as Hanwha AeroSpace and Hyundai Rotem Co. planned to complete the contract signing process for the second contract within the first half of 2023. But contract negotiations were delayed as the Export-Import Bank of Korea faced limits in offering policy financing to a single purchasing country.

The deal also comes after the country’s five largest commercial banks decided to provide financial support to the domestic defense industry with joint loans in November 2023. But the second contract for Hanwha AeroSpace does not cover the entire committed supply, and Korea still has 308 howitzers to supply.

The defense industry raised the possibility that the contract size was reduced due to the financing limit or that the financial support will be carried out sequentially.

There are also cautious observations that the contract size could have been reduced during negotiations with Poland.

Poland is currently undergoing a regime change as the pro-European Union opposition parties formed a coalition and won a majority in the October 15 general election.

Some foreign media outlets have also reported that the defense contract with Korea could be adversely affected in light of the coalition’s pro-EU stance.

“We have established a lasting partnership with Poland based on the deep trust we gained by executing the existing contract,” an official from Hanwha AeroSpace said. “We will work to ensure that the delivery of the remaining contract volume with Poland is completed so that K-defense can become the nation’s future growth engine.”

By Pulse

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