[Yang Nakgyu's Defence Club] Hyundai Rotem Completes Second-Phase K2 Tank Contract Negotiations with Poland

Contract Valued at 9 Trillion KRW... Largest Individual Defense Export Deal
Local Production Facilities Pave the Way for Additional Exports

The second-phase contract negotiations for Hyundai Rotem's export of K2 tanks to Poland have been completed. The contract is valued at over $6 billion (approximately 9 trillion KRW), making it the largest individual defense export contract in history.

According to Hyundai Rotem on July 3, Poland signed a framework contract with Korean defense companies in 2022 to urgently respond to its rapidly heightened security concerns. Subsequently, in the same year, the two countries signed the first implementation contracts for four types of weapon systems (K2 tank, K9 self-propelled howitzer, FA-50, and Chunmoo). In 2023, the second-phase implementation contract for the K9 self-propelled howitzer was signed, followed by the Chunmoo in 2024.

The second-phase contract for the K2 tank was delayed. Initially, negotiations faced difficulties due to financial support issues, and then prolonged over the price and quantity of the tanks. There were also protracted negotiations over which country would manufacture the mission equipment to be installed on the K2 tank platform.

The volume of the second-phase contract is the same as that of the first-phase contract signed in 2022. Under the first contract, Hyundai Rotem was to produce and directly supply 117 out of 180 units (K2GF), while Poland's state-owned defense group PGZ would manufacture 63 units (K2PL) locally. In the second-phase contract, K2PL will be developed and delivered to meet the performance requirements of the Polish military, along with domestically produced K2 tanks. The contract amount has also increased in the second phase. The inclusion of technology transfer, maintenance, repair and operations (MRO) conditions, as well as the supply of related equipment such as armored recovery vehicles, bridge-laying tanks, and engineering vehicles, has doubled the contract value.

The bridge-laying tank connects bridges or temporary crossings, while the armored recovery vehicle is tasked with towing broken tanks or armored vehicles to the rear for repairs. The engineering vehicle is a tank equipped with excavators or mine-clearing equipment. Initially, Hyundai Rotem pursued the production of these derivative vehicles as a separate business, as they were profitable to some extent, and did not include them in the second-phase contract. However, due to a lack of production technology in Poland, all of these vehicles were included in the second-phase contract.

There is also a high possibility of additional exports. Poland originally planned to acquire around 1,000 K2 tanks. The quantities covered by the first and second-phase contracts amount to only 360 units. Starting from the second-phase contract, some units will be assembled locally through cooperation between Hyundai Rotem and Polish defense companies. Production facilities for K2 tanks will also be established in Poland. The establishment of local production bases is even more significant as it increases the likelihood of follow-up contracts for the remaining K2 tanks covered by the framework agreement.

Industry insiders predict that local production will accelerate the establishment of a European base and further contracts with Poland. A Hyundai Rotem representative stated, "We are working to expand the K2 tank's market based on decades of accumulated technology and expertise," and added, "Through continuous research and development, we will strengthen our competitiveness in the tank sector, which is a core asset for national defense and protecting lives, and promote the excellence of domestically produced tanks in the global market."