The recent Russia-Ukraine war has led to a dramatic decrease in artillery shell stockpiles in Europe over the past few years, resulting in propellant (explosive) emerging as a new export item for South Korea's defense industry. Propellant is a core component loaded behind the warhead that uses explosive force to push the warhead out of the barrel. It is mounted in all artillery-related items, including howitzers and mortars. Hanwha Aerospace developed propellant that meets North Atlantic Treaty Organization (NATO) standards and exported it to the United Kingdom for the first time; late last year, it also signed an export contract with the Swedish government. Hanwha Aerospace plans to expand its production capacity by increasing the number of propellant factories.
On the 6th, industry sources reported that Hanwha Aerospace signed a contract to supply propellant for the Archer self-propelled howitzer operated by the Swedish Army, in collaboration with the Swedish Defence Material Administration (FMV), in December of last year. Hanwha Aerospace did not disclose specific details regarding the contract amount or delivery schedule.
Since its establishment after World War II, NATO has adopted a standard caliber of 155mm for artillery. The K9 self-propelled howitzer developed by Hanwha Aerospace is also designed to this standard. The K9 howitzer has been adopted by several NATO countries, including Poland, Norway, Finland, Estonia, Turkey, and Romania, with propellant being exported alongside the vehicles.
Since 2019, Hanwha Aerospace has been developing a Modular Charge System (MCS) optimized for NATO standard 155mm artillery shells. In November 2023, it achieved its first success by exporting to the UK defense company BAE Systems, which is a NATO member.
The export version of Hanwha Aerospace's MCS has a cylindrical can-like shape, which allows for adjusting the distance the shell travels by stacking multiple layers behind the warhead. It also features increased exterior casing rigidity to withstand the impact of automatic supply machines when an automatic loading turret is mounted on the howitzer.
Sweden, which recently decided to purchase propellant from Hanwha Aerospace, operates the wheeled self-propelled howitzer named Archer. The Archer reportedly uses the 155mm standard, making it compatible with Hanwha Aerospace's export version of the MCS.
Hanwha Aerospace has also been pushing to expand its propellant factory with an investment of 667.3 billion won since September of last year. Currently, there are few facilities in Europe capable of manufacturing ammunition and propellant, and the company plans to seize this opportunity to increase exports. The factory is expected to be completed by the end of 2026 and to begin full-scale operations starting in 2027.
Securities firms expect that propellant exports will expand from 2027, when the factory expansion is expected to be completed, contributing to annual sales in the trillion won range. Byun Yong-jin, a researcher at iM Securities, noted, "Making large-scale facility investment decisions related to ammunition is difficult without certainty about the future increase in demand for ammunition and propellant," adding, "The chances for future performance related to ammunition to rise are very high."