Hanwha selected as preferred bidder for armored vehicle exports to Australia

Hanwha Aerospace Co.’s infantry fighting vehicle, Redback. [Courtesy of Hanwha Aerospace]

South Korea’s Hanwha Aerospace Co. has been named as the preferred bidder for Australia’s LAND 400 program, which involves the acquisition of multi-billion dollar next-generation armored vehicles for the Australian Army. The highly competitive project saw Hanwha Aerospace competing against German defense firm Rheinmetall AG over the past five years.

Pat Conroy MP, Minister for Defense Industry of Australia, conveyed his intention to purchase 129 units of Hanwha Aerospace’s infantry fighting vehicle, Redback, for a total contract value of about A$10 billion (around 9 trillion won), the Australian reported on Tuesday.

Notably, the contract size has significantly reduced from the initially projected A$27 billion. According to media reports, while Rheinmetall offered a lower bid, Hanwha Aerospace’s Redback scored higher in performance compared to Rheinmetall’s Lynx. Another media outlet, Australian Financial Review, said that the Australian government made its decision on July 25, and the contract was signed between Korean and Australian governments and businesses on the following day. Contract details are expected to be announced on Thursday.

In September 2019, Australia announced the Land 400 Phase 3 Project to boost its armored vehicle inventory and Hanwha’s Redback and Rheinmetall’s Rings were shortlisted.

The bidding outcome is being described as a dramatic turnaround for Hanwha Aerospace. However, the tide turned in May of last year with the change of government in Australia. While the new government delayed the selection of a contractor and significantly downsized the project, German defense contractor Rheinmetall rose to the occasion.

Australian Prime Minister Anthony Albanese traveled to Germany this month to sign a $1 billion deal with Rheinmetall to reverse-export 100 Boxers to Germany from Rheinmetall’s plant in Brisbane, Australia.

Hanwha’s turnaround is likely due to a trade deal that promises investment in Australia, including the construction of a local production plant. Hanwha Aerospace is currently building a state-of-the-art armored vehicle production facility (H-ACE) at Avalon Airport in Geelong, Australia. With an investment of 200 billion won, the facility is expected to strengthen local defense capabilities and create more than 600 jobs. This is significant because it is the first overseas defense plant for Hanwha Aerospace, which can produce self-propelled artillery and armored vehicles. Hanwha Aerospace currently operates production bases in Connecticut, U.S. and Hanoi, Vietnam, where it produces only aviation engine parts.

The newly developed Redback, designed by Hanwha Aerospace, reflects the specific requirements of the Australian Army, with a focus on enhancing defense capabilities to withstand various threat conditions. The vehicle prioritizes crew survivability and is equipped with anti-tank missile defense systems and stealth features to evade heat-seeking missile attacks. Poland is also reportedly considering the adoption of the Redback.

Hanwha’s success in winning the contract also signifies a diversification of its export portfolio, which has largely centered around its K-9 self-propelled howitzer - a highly sought-after product that occupies around 50 percent of the global self-propelled howitzer market.

Despite the victory, some experts caution that it may not be easy for the Korean defense industry to remain optimistic about future exports due to growing competition from established defense exporters such as Germany and the U.S.