Jędrzej Graf: Hyundai Rotem has just signed a consortium agreement with PGZ, regarding the manufacturing of K2PL Main Battle Tank. What is the significance of this agreement and what are the key elements of the agreement?
Mr. Jun Mo SEO, Hyndai Rotem Company Vice President: HRC, PGZ and WZM have signed the term sheet agreement on February 23rd and the consortium agreement on March 31st. Those agreements define and state the basic framework for cooperation among the members and the role of each member to execute the K2PL program. As the consortium has been established, we can now initiate the negotiation with the Armament Agency for the executive contract of the K2PL program. With the consortium agreement, HRC and PGZ group share common goals and understanding for our long term partnership.
The key elements of the consortium agreement include each member's scope of works, role and responsibility for production and delivery of the products, decision making procedure, cooperation for technology transfer, and financial arrangements.
When could the deliveries of K2PL tanks manufactured or assembled in Poland start? According to last year's briefings, manufacturing of K2PL was to be divided between Poland and Korea? How many tanks are planned to be manufactured in Poland?
According to the Framework contract which was signed on July 27th last year, 500 K2PL MBTs will be produced in Poland and 320 in Korea. The initial delivery of the K2PL MBTs is planned to be in 2026. (The consortium members should be very efficient in the cooperation in order to meet the delivery schedule successfully.
And how do you assess the readiness of Polish industry to absorb the Transfer of Technology? Have you already agreed the scope of necessary investments to implement K2PL manufacturing in Poland? Will there be some greenfield investments or do you prefer to use existing facilities?
HRC expects that the Polish defense industry will be able to handle the transfer of MBT technology successfully. We know that PGZ companies already have experiences. HRC will support the Polish industry to ensure successful transfer of technology and production of the 500 K2PL tanks in Poland in time.
HRC members have surveyed the Polish companies' production capability and discussed with PGZ members about the necessary investments for manufacturing K2PL tanks in Poland. Considering the tight schedule of the K2PL program, it would be desirable to use the existing production facilities in Poland and save time. However, we expect that some additional facilities will be necessary to manufacture the K2PL MBT in Poland. HRC will discuss with the Polish partners in order to figure out the best solutions for the investment in production facilities together.
When do you expect to finalise the configuration of K2PL tank? What can you tell about the configuration now and to which extent will it differ from the current K2 Gap Filler?
We expect that the configuration of the K2PL tank will be decided by the Armament Agency before the negotiation for the K2PL executive contract. HRC has discussed with the Armament Agency for the technical issues for this purpose. The discussion covers several items including RCWS (Remote Control Weapon System) and the enhanced protection of the K2PL tanks with the APS (Active Protection System).
What is the significance of the consortium agreement, taking into account Hyundai Rotem armored vehicle business in Europe and worldwide? Do you see any specific markets for K2 in Europe, and to which extent could Poland play a role in manufacturing of the tanks?
There are a lot of old MBTs in Europe that should be replaced by new MBTs and HRC hopes to provide the K2 MBTs to the European countries and contribute to the peace in Europe.
HRC is willing to cooperate with PGZ group for this through the partnership established with the K2PL consortium. HRC and PGZ will produce K2 MBTs and export them to the 3rd countries in Europe together. We can cooperate for the MRO (Maintenance, Repair and Operation), too. We recognize that several European countries are considering K2 as the possible option for their new MBT.
In particular, do you see a potential for K2 in Romania, as Bucharest signaled the need for new Main Battle Tanks? How are the negotiations going?
Romania has operated the old MBTs and provided some of their MBTs to Ukraine recently. We recognize that Romania is planning to procure M1A2 MBTs from the USA. The negotiation for the procurement of K2 MBT has not begun, yet. HRC is going to cooperate with PGZ group for the export of K2 in Europe.
Hyundai Rotem has been present during IDEX 2023, and a specific K2 configuration has been proposed for a number of Middle Eastern customers. Could you elaborate on the marketing opportunities for K2, and the milestones achieved during IDEX 2023 in particular?
Most countries in the Middle East are still operating old MBTs and those countries are planning to replace them with new MBTs. Several Middle Eastern countries showed their keen interest in K2 during IDEX 2023. As Korean companies become more successful in developing the Korean indigenous powerpack (engine & transmission), we expect to get more marketing opportunities for K2 in the Middle East.
Norway has decided to purchase German Leopard 2A7 Main Battle Tanks, which competed with K2. Some media reports say that the decision could be politically motivated, and officially both tanks were highly assessed by the Norwegian MoD. How would you comment on that and what is your experience?
HRC is grateful to have the opportunity to participate in the MBT competition in Norway. HRC members worked very hard for the competition and, as the result, the performance of K2 was proven to be equal with that of Leopard2A7. After the thorough tests and evaluation, the NDMA (Norwegian Defense Materials Agency) recommended K2 to the Norwegian MOD. Among the world class performance of K2 MBT, superior mobility and advanced digital system outperform other major MBTs in the world. Furthermore, HRC offered a better price condition to the NDMA. However, the Norwegian government decided to procure Leopard2A7. HRC respects the decision by the Norwegian government. I think that the competition in Norway provided a good opportunity to HRC to prove the excellent capability and competency of K2 MBT to the world.
Norway, like Poland, was according to media reports offered a number of K2 tanks (24) as Gap Fillers, for quick delivery. Could those be provided to other countries, including Poland?
As K2 MBT is being produced for the Korea Army and HRC is increasing its capability of K2 production, HRC will be capable of providing the K2 tanks as Gap Fillers to the foreign countries.
And last but not least, what are the plans of Korean Army for K2 tank development? Do you see a chance to receive domestic orders for those tanks, particularly as some of the rd batch were provided to Poland as gap fillers? And what are the ways Korean variant of K2 is planned to be improved, to what extent are they similar to K2PL?
Since 2014, more than 200 K2 MBTs have been produced by HRC and provided to the Korea Army. We expect that the Korea Army will replace more of its old MBTs with hundreds of K2 MBTs in the coming years.
HRC has upgraded the performance of K2 and will improve it continuously, especially in the area of protection and fire capability. This will be related with the modification of K2 for K2PL such as the installation of APS and RCWS.
Thank you for the conversation.