Hanwha Aerospace expands investments in global startups for growth

Hanwha Aerospace Co.’s aircraft engines. [Courtesy of Hanwha Aerospace]

Hanwha Aerospace Co., a defense unit of South Korea’s Hanwha Group, has been seeking new sources of growth by investing in sectors ranging from rare earth metals to cutting-edge batteries and precision-guided munitions. The move is seen to be spearheaded by Hanwha Group Vice Chairman Kim Dong-kwan that eyes defense for future growth.

According to multiple industry sources on Tuesday, Hanwha Aerospace has recently invested 4 billion won ($2.98 million) in Phoenix Tailings, Inc., a U.S. startup that taps its distinct technology to separate rare earth oxides. It is the third investment Hanwha Aerospace has made in global startups this year.

The startup, based in Massachusetts, U.S., produces rare earth metals such as Neodymium (Nd) and Dysprosium (Dy), the elements used for permanent magnets. Rare-earth magnets, or permanent magnets, can be widely used in the production of aerospace engines and wind turbines.

Phoenix Tailings, founded as a startup by a group of scientists and engineers, all of who graduated from Massachusetts Institute of Technology (MIT), has been known for its leading role in building a supply network of rare earth metals in the U.S. to reduce dependence on China.

“The recent investment in Phoenix Stailings was motivated by the potential synergy between the metals and elements manufactured by the company and its operations in the space and defense sectors,” said an unnamed representative from Hanwha Aerospace. “We acknowledged that Phoenix Stailings is in its initial stages, and the investment is relatively modest, which means we need a wait-and-see approach to gauge its future performance,” the official added.

Hanwha Aerospace is also ramping up the advancement of aerospace transportation technology, driven by its recognition that the sector, responsible for ferrying both individuals and cargo to space, will serve a pivotal role in the company’s future growth.

Kim envisions building a value chain in the aerospace business encompassing space vehicles, transportation systems, satellite services, and space exploration missions. He has been in charge of Space Hub, a brand integrating Hanwha’s aerospace business.

Hanwha’s investment in Phoenix Tailings was deemed in line with the Korean firm’s efforts in urban air mobility (UAM), another source of growth, as the materials produced by Phoenix Tailings can be a critical part of UAM applications.

In May, Hanwha Aerospace allocated a substantial investment of 9.2 billion won to the U.S. startup Forge Nano, Inc., in a bid to acquire cutting-edge eco-friendly power system technology tailored for UAM applications. The investment is part of Hanwha’s roadmap that focuses on next-generation battery-related technology to establish future, eco-friendly power systems for UAMs.

Founded in 2011 in a lab at the University of Colorado, Forge Nano has a precision nano-coating technology that extends the life of secondary batteries. The U.S. startup has been recognized for its technology, drawing investments from global partners, such as Volkswagen.

Hanwha Aerospace’s engagement in startup investments is concurrently driving the procurement of sophisticated defense technologies. In April, the company invested 6.6 billion won in InfiniDome, a startup specializing in defense technology designed to counteract adversary jamming efforts.

Market insiders are observing to identify the upcoming startups that Hanwha Aerospace will choose to invest in, with expectations that potential investments can be varied in terms of sectors.