Australian Prime Minister Scott Morrison and South Korean President Moon Jae-in of South Korea have struck a $717 million defense contract.

The contract, worth approximately one billion Australian dollars, was sealed on Monday during Moon's four-day visit to Canberra.

It is worth noting that the President of South Korea is the first foreign leader to visit Australia since the pandemic.

What's the deal?

Hanwha, a South Korean defense business, will supply the Australian army with artillery weapons, supply vehicles, and radars under the new defense contract.

It is Australia's largest defense contract with an Asian country, and it comes at a time when relations between Australia and China are at an all-time heightened tension.

Australia recently announced a contract with the United States and the United Kingdom to develop nuclear-powered submarines, codenamed AUKUS; a move that China has publicly denounced.

Morrison stated that the new defense deal would result in the creation of approximately 300 jobs in Australia, where Hanwha has a division.

“The contract that we have signed today, I think, speaks volumes about what we believe are the capabilities of the Korean defense industry,” he said.

“It’s an important further chapter in the defense industry story for Australia as we continue to build our sovereign capability and Korea is an important partner in that journey – both in our security arrangements, but also in the building of our sovereign capability in defense manufacturing.”

Maintaining interests

Moon stated that when it came to geopolitical ideals, South Korea and Australia were similar and that his visit to Canberra was "very important for the national interest of Korea and to promote peace and prosperity in the region."

He did, however, emphasize the importance of South Korea's relationship with China, particularly in terms of pursuing peace with North Korea.

“Therefore, South Korea is focused on the steadfast alliance with the US and also with China,” Moon said. “We want a harmonized relationship.”

Australia-South Korea trade

Under a free trade agreement in place since 2014, South Korea is Australia's fourth-largest trading partner and fourth-largest export market.

This year celebrates the 60th anniversary of the two countries' diplomatic relations.

Morrison and Moon decided to expand their formal connections to a "comprehensive strategic partnership" during their meeting.

The leaders also agreed to collaborate on the development of renewable energy technologies, such as hydrogen, as well as the facilitation of the delivery of vital minerals, which Australia possesses in abundance.