Hanwha Aerospace Co. is building South Korea’s first commercial rocket with an ambitious target: matching Elon Musk’s SpaceX in price within the next decade.
The company is part of Hanwha Group, a 71-year-old conglomerate that started as an explosives maker, branched into weapons sales and is now shifting into green energy, defense and aerospace. Cash from arms sales to Ukraine’s neighbors is helping to fund Hanwha’s efforts to expand its two-year-old space business.
Nuri, a rocket developed by the Korea Aerospace Research Institute using Hanwha’s engines, isn’t reusable, but the goal is to eventually halve launch prices by 2032 to match SpaceX, Yoo Dongwan, senior executive vice president of Hanwha Aerospace, said in an interview.
SpaceX’s Falcon 9 currently costs about $67 million per launch.
“Initially we may be a niche player and eventually, we hope to catch up” with SpaceX, Yoo told Bloomberg Television in Seoul.
Shares of Hanwha Aerospace have climbed more than 30% this year, after jumping 53% in 2022 when Hanwha Group merged all its defense businesses into Hanwha Aerospace. Hanwha Group is a family-controlled conglomerate; heir-apparent Dong Kwan Kim, a Harvard University graduate, leads the aerospace business.
Like other rivals, Hanwha Aerospace is seeking to become more than a rocket company and push into satellite operation, moon exploration and resource extraction.
Hanwha Aerospace has bought a 9% stake in British satellite startup OneWeb Ltd., a rival to SpaceX’s Starlink satellite internet service. Parent Hanwha Group is in process of buying a 49.3% stake to be the largest shareholder in submarine maker Daewoo Shipbuilding & Marine Engineering.
South Korea’s President Yoon Suk Yeol has made it his goal to develop a home-grown commercial-rocket industry. Last year, Hanwha Aerospace won a bid to jointly develop the country’s next-generation commercial rocket with the government.
Hanwha, which has only worked on aircraft components and engines until now, plans to make three more Nuri rockets with government researchers. In Japan, Mitsubishi Heavy Industries Ltd.’s H3 rocket — which recently failed to reach orbit — is aiming for $50 million per launch.
Demand for Korean rockets will initially be driven by the government but the goal is to eventually reduce that to just half, Yoo said. Hanwha is looking to develop a next-generation rocket on its own, he added.
“We are aiming for a reusable rocket,” Yoo said. “That’s something we have to grow on our own” as foreign companies are “not willing to share that technology with us,” he said.
Arms Exporter
Hanwha is one of the world’s fastest-growing aerospace and defense contractors. Hanwha Systems, a subsidiary of Hanwha Aerospace, ranked third in revenue growth among 100 companies analyzed by PwC in its 2022 global aerospace and defense report. Among Asian firms, it was No. 1.
Last year, Hanwha Aerospace posted record sales of 6.5 trillion won ($5 billion) with record operating profit, led by weapons. It signed a new contract with Poland and a partnership with Romania, both of which are neighboring Ukraine, as well as with Egypt.
South Korea’s arms exports increased 74% in 2022, compared with a 35% decline for the UK, a 4.4% drop for Spain and a 15% decline for Israel, according to a report by the Stockholm International Peace Research Institute.
South Korea is uniquely positioned in the global arms market with weapons that are relatively affordable and meant to defeat Soviet-based conventional systems used by neighboring North Korea. Hanwha’s K-9 cannons were used during the shelling between the two Koreas in 2010 on Yeonpyeong Island.
“Hanwha is making a tremendous amount of money from selling weapons,” said Lee Dong-Heon, analyst at Shinhan Financial Investment in Seoul. “So the firm has the capacity to invest in aerospace.”
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