Hanwha signs MOU with WB Group for $2 bn Polish submarine project bid

Hanwha Ocean Co. said on Wednesday it has signed an initial agreement on business cooperation with Polish defense firm WB Group to raise its chances of winning a $2.2 billion next-generation submarine project, ORKA, in the European country.

The shipbuilding unit of South Korea’s chemicals-to-defense conglomerate Hanwha Group said it signed the memorandum of understanding (MOU) with WB Group on the sidelines of MSPO 2024, an international defense industry exhibition held in the central Polish city of Kielce. 

The ORKA project, worth about 3 trillion won ($2.2 billion), is a new submarine construction project for the modernization of the Polish Navy, involving the acquisition of three submarines.

Founded in 1997, WB Group is one of Europe’s largest defense contractors, producing military communication equipment, reconnaissance systems and weapon control systems.

Hanwha Ocean, formerly Daewoo Shipbuilding & Marine Engineering Co. (DSME), is one of the world’s major container shipbuilders and the only Korean company that has built submarines for the Korean Navy since 1987.

Under the MOU, Hanwha and WB plan to leverage their technologies and networks to win the ORKA project.

During the MOU signing event, Hanwha explained its plans to localize its submarine maintenance, repair and overhaul (MRO) business.

If Hanwha wins the Polish contract, Kolon Spaceworks Co., a Korean equipment supplier, will likely handle the supply of MRO materials, sources said.

TECHNOLOGY TRANSFER, LOCALIZATION

In May, Hanwha Ocean held an investor forum in Gdansk, where it announced plans to transfer its submarine equipment and parts technology and collaborate with Polish partners.

In the same month, Hanwha said it joined hands with Polish state-run defense group Polska Grupa Zbrojeniowa S.A. (PGZ) to win the ORKA project.

In June, the Korean shipbuilder, along with Poland's state-owned defense company PGZ and British defense company Babcock International Group plc, submitted a joint MRO business plan to Poland’s armament agency.

Hanwha aims to sell the Jang Bogo-III class Batch-II, or the KSS III diesel-electric submarine, to Poland which currently operates a single 1980s-era Russian-origin submarine.

Hanwha Ocean plans to team up with major South Korean contractors to sell the Jang Bogo-III, manufactured with 80% Korean technology and components.

"The MOU with WB Group is part of our efforts to strengthen partnerships with local companies. We expect WB Group to be a strong ally for Hanwha in winning the ORKA project,” said Hanwha Ocean Vice President Jung Seung-kyun.

Hanwha Group has already bagged billions of dollars in defense contracts with Poland. In April, Hanwha Aerospace Co. signed a $1.64 billion deal to supply 72 units of the Chunmoo multiple launch rocket system (MLRS) to Poland.

Write to Sang-Hoon Sung at uphoon@hankyung.com

In-Soo Nam edited this article.