Negotiations among domestic defense industry companies regarding the export of Cheon-gung II, known as 'Korea's Patriot missile,' to Iraq are ongoing. After LIG Nex1 signed a comprehensive contract for the export of Cheon-gung II with the Iraqi government in September last year, LIG Nex1 and the Hanwha Group's defense affiliates have continued discussions about pricing, delivery dates, and schedules. Although the atmosphere has become more positive compared to last year, as regular negotiations are taking place among the staff, differences between the companies remain, and it is expected that it will take a long time to reach a conclusion.
According to the defense industry on the 30th, LIG Nex1 and Hanwha Aerospace are continuing negotiations regarding expenses, estimates, and other matters related to the production of Cheon-gung II. In the production of Cheon-gung II, Hanwha is responsible for the phased array radar and vertical launch system, while LIG Nex1 is in charge of missile system integration and has produced the engagement control center. Representatives from both companies noted, "We are increasing points of contact to successfully proceed with the export to Iraq."
Cheon-gung II is a domestically produced missile defense system. It is a medium-range, medium-altitude surface-to-air weapon that detects aerial targets such as enemy aircraft and missiles and intercepts them with missiles. Its maximum interception altitude is 15 km, lower than the U.S. Patriot system (20 km). However, its missile price is about one-third of that of the U.S., making it highly regarded for its performance-to-price ratio. Before the export to Iraq, it was also exported to the United Arab Emirates and Saudi Arabia.
The dispute between LIG Nex1 and Hanwha began in September last year. LIG Nex1 entered into an export contract with the Iraqi government without agreeing on the delivery price or schedule with Hanwha. The export quantity, dates, and amounts were agreed to be kept confidential. At that time, Hanwha expressed concerns that the lack of agreement could make the delivery itself difficult. There were forecasts that the export to Iraq could be canceled, but with the National Assembly and the defense procurement agency stepping in to mediate, both companies agreed to "smooth exports."
The atmosphere of negotiations between LIG Nex1 and Hanwha has improved this year. In February, a meeting led by Administrator Seok Jong-geon of the Defense Acquisition Program Administration was held, which was attended by Hanwha Aerospace CEO Sohn Jae-il and LIG Nex1 CEO Shin Ik-hyun, where they agreed to strengthen "information exchange and cooperation," leading to practical discussions. A military official noted, "There were no negotiations at all before the representatives met, and the atmosphere was awkward. After the representatives met, negotiations became more active."
However, there are projections that it will take considerable time to resolve the dispute. This is because the ongoing negotiations are directly related to the companies' revenue and are being conducted fiercely. The issue of leading the export is also at stake. LIG Nex1 and Hanwha plan to continue discussions, as there is still time before the Cheon-gung II is delivered to the Iraqi military.
An industry official said, "There are no technology development costs for the quantity of exports to Iraq. Once expenses and other negotiations are finalized, exports will proceed smoothly," adding, "The new government will work to mediate the conflict, and each company will have to be cautious. A conclusion is expected this year."