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JAXA's second attempt at launching the H3 rocket ended in failure.
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The flight termination system was activated because the second stage engine failed to ignite.
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JAXA is investigating the incident to identify the cause of the problem.
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The H3 was built by Mitsubishi Heavy Industries and cost over 200 billion yen ($1.5 billion).
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Its inaugural flight was delayed due to engineering problems and its first launch attempt was aborted due to an electrical interference issue.
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The H3 is seen as "crucial to the nation's business and national security ambitions" by Prime Minister Fumio Kishida.
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Its launch costs are believed to be lower than those of SpaceX's Falcon 9.
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The destroyed H3 rocket was carrying ALOS-3, a satellite equipped with disaster management tools and an experimental infrared sensor that could detect North Korean ballistic missile launches.