Hyundai Rotem Nears 9 Trillion Won K2 Tank Contract with Poland This Month

9 Trillion Won for 180 Units Including MRO... Largest Contract Ever
Success of Poland Deal Could Pave the Way for Entry into the European Defense Market

The second export contract for K2 tanks to Poland is expected to be signed as early as the end of this month. This will be the first defense export deal under the Lee Jaemyung administration, with the contract amount reaching around $6 billion (approximately 9 trillion won). This is the largest individual defense export contract in history.

On June 10, an official in the defense industry stated, "We plan to conclude final negotiations with Poland this week, and the signing ceremony is expected to take place in the latter part of this month."

The volume of the second contract is the same as the first contract signed in 2022 (180 K2 tanks, with a contract value of about 4.5 trillion won). Under the first contract, Hyundai Rotem supplied 117 units (K2GF) directly, while 63 units (K2PL) were to be produced locally in Poland by the state-owned defense group PGZ. However, the second contract includes technology transfer as well as maintenance, repair, and operations (MRO) conditions. It also covers related equipment such as armored recovery vehicles, bridge-laying tanks, and engineering vehicles. As a result, the contract value has doubled.

Bridge-laying tanks are used to connect bridges or lay temporary bridges, and armored recovery vehicles are responsible for towing broken-down tanks or armored vehicles to the rear for repairs. Engineering vehicles are tanks equipped with excavators or mine-clearing equipment. Initially, Hyundai Rotem pursued the supply of these variant vehicles as a separate business, considering their profitability, and did not include them in the second contract. However, due to a lack of production technology in Poland, it is reported that all variants were included in the second contract.

At the Korea International Defense Industry Exhibition held on the 2nd at Gyeryongdae, Chungnam, Hyundai Rotem's K2 tank is on display. Photo by Kang Jinhyung aymsdream@

With the contract value doubling, the Polish side reportedly requested a price reduction. Hyundai Rotem maintains that further reductions are difficult, citing not only technology transfer but also the fact that more than 90% of the components are domestically produced.

The second contract has been under discussion since the end of last year. In the early stages of negotiations, there were difficulties due to financial support issues, which prolonged the talks over the price and quantity of the tanks. There were also protracted negotiations over the variant vehicles: while the K2 platform is supplied by Hyundai Rotem, there was debate over which country would manufacture the mission equipment to be mounted on the platform.

If the price negotiations are finalized this week, the contract signing ceremony is expected to take place in the latter part of this month. This timing takes into account the possibility that President Lee Jaemyung will attend the North Atlantic Treaty Organization (NATO) summit to be held in The Hague, Netherlands, on June 24?25. If President Lee attends the NATO summit, it will also mark his first meeting with Karol Nawrocki, who was elected President of Poland on June 2.

The export to Poland could serve as a springboard for expanding the defense market to the European Union (EU) and Canada. The 27 EU member states have effectively finalized the 'European Re-Armament Plan,' worth a total of 800 billion euros (about 1,258 trillion won), to strengthen military capabilities. On June 9 (local time), Canadian Prime Minister Mark Carney announced in the national defense and security strategy that Canada aims to raise its defense spending to 2% of gross domestic product (GDP) within this fiscal year.

Canada plans to increase defense spending to acquire new equipment such as submarines, aircraft, ships, armored vehicles, and artillery. Until now, about three-quarters of Canada’s defense spending on weapons procurement has been paid to the United States, but Prime Minister Carney has expressed the need to reduce this. He has previously stated his intention to decrease reliance on the United States for defense, strengthen Canada’s own security capabilities, and enhance security cooperation with European NATO allies.