HD Hyundai, Hanwha Ocean likely seek partnership for $46 bn order

[Courtesy of HD Hyundai and Hanwha Ocean]

South Korea’s HD Hyundai Co. and Hanwha Ocean Co. may make a concerted effort to win a submarine order worth approximately 60 trillion won ($46.1 billion).

According to multiple industry sources on Thursday, HD Hyundai Co., the holding company of HD Hyundai Heavy Industries Group, and Hanwha Ocean, formerly known as Daewoo Shipbuilding & Marine Engineering Co., are expected to collaborate on the submarine construction project for the Canadian Navy, which is seeking a proposal to order 12 submarines at a cost of 60 trillion won.

Potential maintenance costs were taken into account in the budget, with an estimated construction cost of 2 trillion won per vessel.

Woo Won-sik, managing director of the Special Ship Business Unit at HD Hyundai Heavy Industries (HHI) Co., emphasized the company‘s capabilities during a recent corporate presentation.

“HD HHI can produce three frigates and 0.5 submarines annually while performing depot maintenance for one ship,” he said.

Given the large scale of the 12-ship submarine project, it would be challenging for a single company to handle it alone. To prevent potential delays and ensure successful completion, the strategy involves both HD Hyundai and Hanwha Ocean.

Choi Tae-bok, director of the Special Ship Business Unit at HD HHI, explained that previous experiences with overlapping foreign and domestic submarine orders led to delivery delays. Therefore, bringing both companies together aligns with the country’s policy.

There have also been discussions, in the meantime, about the possibility of Hanwha Ocean pursuing the project independently. Some speculate that the company has the production capacity to manage one or two projects on its own, making it a strong contender for the Canadian submarine order without the need to form a consortium with HD Hyundai.