South Korea’s Hanwha Aerospace Co. is building the country’s first commercial rocket, setting an ambitious goal to catch up with Elon Musk’s SpaceX in terms of launch prices within the next 10 years.
South Korea’s World rocket lifts off
Hanwha Aerospace is the only aero-engine manufacturer in Korea and is part of the Hanwha Group. The Hanwha Group is a 71-year-old conglomerate that began as an explosives manufacturer and later became involved in arms sales, but is now turning to green energy, defense and aerospace. Funds from arms sales to Ukraine’s neighbors are helping Hanwha expand its two-year-old space business.
Hanwha Aerospace Senior Executive Vice President Yoo Dongwan said in an interview that Nuri, a rocket developed by the Korea Aerospace Research Institute using Hanwha engines, is not yet reusable, but that the company aims to cut launch prices in half by 2032 to match those of SpaceX. SpaceX’s Falcon 9 currently costs about $67 million per launch.
“Initially, we may be a niche company, but eventually, we want to catch up with SpaceX,” Yoo Dong-wan said in an interview in Seoul.
South Korean President Yoon Seok-yeol has made it his goal to develop the country’s commercial rocket industry. Last year, Hanwha Aerospace won a bid to develop the next generation of commercial rockets with the South Korean government.
SpaceX Falcon 9 is a reusable rocket
So far, Hanwha Aerospace has only been engaged in aircraft components and engines, and plans to remanufacture three World rockets together with Korean government researchers. In Japan, Mitsubishi Heavy Industries, whose H3 rocket recently failed to reach its intended orbit, aims to keep its cost per launch at $50 million.
Demand for Korean rockets will initially be driven by the government, but the company eventually aims to reduce the government business to half, said Dongwan Yoo. He added that Hanwha Aerospace is looking to develop the next generation of rockets on its own.
“Our goal is to develop reusable rockets,” he said, “something we have to develop by ourselves because foreign companies are not willing to share technology with us.”
Also to dabble in satellites
Hanwha Aerospace’s shares have risen more than 30% so far this year. 2022 saw the merger of all of Hanwha Group’s defence businesses into Hanwha Aerospace, driving Hanwha Aerospace shares up 53%. Hanwha is a family-controlled conglomerate, with Harvard-educated heir apparent Dong Kwan Kim leading the aerospace business.
Like its competitors, Hanwha Aerospace is not just a rocket company but is also looking to enter satellite operations, lunar exploration and resource extraction. Hanwha Aerospace has acquired a 9% stake in OneWeb, a British satellite startup that is a competitor to SpaceX’s Starlink satellite Internet service. Also, Hanwha is in the process of acquiring a 49.3% stake in submarine manufacturer Daewoo Shipbuilding & Marine, making it the largest shareholder.
Hanwha is one of the fastest-growing weapons manufacturers in the world
Moreover, Hanwha Aerospace is one of the fastest-growing aerospace and defence contractors in the world. Hanwha Aerospace’s subsidiary, Hanwha Systems, ranked third in revenue growth among the 100 companies analyzed in PwC’s Global Aerospace and Defense Report 2022. Among Asian companies, it ranked first.
Weapons sales are lucrative
Last year, Hanwha Aerospace posted record sales of 6.5 trillion won ($5 billion) and record operating profit, with the highest profit from weapons sales. It signed a new contract with Poland and established partnerships with Romania and Egypt. Both Poland and Romania are neighbours of Ukraine.
A report by the Stockholm International Peace Research Institute (SIPRI) shows that South Korea’s arms exports grew by 74% in 2022, while the UK fell by 35%, Spain by 4.4% and Israel by 15%. South Korea is in a unique position in the global arms market with relatively inexpensive weapons. Hanwha K-9 cannons were used in the 2010 Yonphyong Island shelling.
Hanwha is making huge profits from the sale of its weapons business,” said Lee Dong-Heon, an investment analyst at Shinhan Financial in Seoul. Therefore, the company can afford to invest in the aerospace business.”