Hanwha Aerospace has secured a second phase contract for exporting 152 K9 self-propelled howitzers, worth approximately 3.4 trillion won, following their initial deal in August last year to export 212 units worth around 3.2 trillion won.
On Dec. 4, Hanwha Aerospace announced the signing of this second phase contract with the Polish Armament Agency, valued at 3.4474 trillion won (US$2.631 billion), to supply additional K9 self-propelled howitzers and related equipment.
In July last year, Hanwha Aerospace initially contracted with the Polish Armament Agency to export 672 K9s and 288 Cheonmu multiple launch rocket systems. The first phase contract, signed in August and November, involved the export of 212 K9s and 218 Cheonmus. The current deal includes a portion of the remaining 460 units (152 units) from the initial contract, set to be delivered sequentially by 2027, contingent upon financial agreements.
The 152 K9 units in this contract consist of 6 K9A1 models and 146 K9PL models. The K9A1, used domestically, is an upgraded version, while the K9PL is modified to meet the specific requirements of the Polish military.
A year and four months after the initial contract, Hanwha Aerospace has successfully finalized the second phase agreement. This brings the total number of K9s confirmed for export to Poland to 364 units, with further exports of the remaining 308 units from the initial contract expected.
Under the deal, Hanwha Aerospace will supply Poland with K9 self-propelled howitzers, 155 mm ammunition for the howitzers, and a comprehensive military logistics support package for the maintenance and upkeep of the K9s, including cooperation in local production of maintenance parts.
Korean defense companies had faced difficulties in finalizing the second contract due to exceeding the financial support limits of the Export-Import Bank of Korea. Typically, weapon exporting countries provide financial support like low-interest loans and long-term installment payments to buyer countries. However, the Export-Import Bank’s export finance limit, based on its capital of 15 trillion won, was reached. Consequently, five major domestic banks considered a joint loan to facilitate the contract, resulting in its realization through export financing support of approximately 3.4474 trillion won.
Despite the success of this second contract, further agreements are viewed with caution by defense companies. They believe that support through commercial banks is a temporary measure and urge for legislative changes to increase the credit limit of the Export-Import Bank. Without revising the policy finance system, additional contracts currently under negotiation with Poland might face obstacles.
Korean defense companies are in ongoing negotiations for additional contracts with Poland. Hanwha Aerospace awaits a priority supply contract for 70 Cheonmu units, and Hyundai Rotem is anticipating a deal for 180 K2 tanks.
In the National Assembly, amendments are pending to increase the statutory capital limit of the Export-Import Bank to 35 trillion won and to raise the credit limit for government-to-government contracts. If these amendments pass, not only the K9 self-propelled howitzer but also the second phase contract for Hyundai Rotem’s K2 tanks could be secured. The initial contract for Hyundai Rotem’s K2 tanks covers 1,000 units, with the first phase contract agreeing to supply 180 units, leaving a remaining 820 units.