HD Hyundai Heavy wins record $463 million warship deal from Peru’s Navy

South Korea’s top shipbuilder HD Hyundai Heavy Industries Co. said on Friday it has won a $463 million contract to build four warships for Peru’s Navy – Hyundai Heavy’s and Korea’s largest-ever warship export deal to Latin America.

Hyundai Heavy said it has also secured exclusive rights to work with the Peruvian Navy for over a decade, opening the door for additional shipbuilding deals worth billions of dollars.

Hyundai Heavy, also known as HHI, said it was chosen through bidding to be the shipbuilding partner for the Navy’s fleet modernization project.

Under the $63 million deal, HHI and SIMA Peru S.A., Peru’s state-owned shipbuilder, will jointly build four warships at Peru’s Callao shipyard by 2029.

The four ships are two 1,500-ton logistics transport auxiliary ships, often called landing ships, one 200-ton oceangoing patrol vessel (OPV) and one 3,400-ton multi-role combat ship, or frigate.

HD HYUNDAI-SIMA PERU PARTNERSHIP

Under the contract, HD Hyundai Heavy will design the ships and provide equipment and technical support for shipbuilding while SIMA Peru will be responsible for the final shipbuilding process.

SIMA Peru, which signed the deal on behalf of the Peruvian Navy, said it picked HHI after evaluating the interests submitted for the contract from it and shipbuilders from Germany, the US, the UK, France, Spain, Italy and the Netherlands.

In evaluating the bidders’ proposals, technology transfer and participation of local industries were also taken into consideration, in addition to technical aspects, price and construction period, it said.

Hyundai Heavy and SIMA are expected to sign a formal contract in April when the Korean company will begin working with the Peruvian Navy for 15 years as its shipbuilding partner.

The Navy is seeking to improve its infrastructure and technology for its shipyard located next to the port of Callao, the largest in the country on the central coast of South America.

PERU’S FLEET MODERNIZATION PROJECT

Peru plans to build 23 ships to modernize its fleet and hopes to build a new dock to receive and repair large cargo ships that would arrive from the Chancay mega-port built by China's Cosco Shipping, which is set to begin operations at the end of the year.

The country's government expects its new ports to help it compete with the main Latin American ports as the main route to Asia.

Formerly Hyundai Heavy Industries Co., HD Hyundai Heavy is a unit of HD Korea Shipbuilding & Offshore Engineering Co.

HD KSOE, the intermediate holding company of HD Hyundai Co., a shipbuilding, oil refining and machinery conglomerate, has three shipbuilding affiliates under its wing – HD Hyundai Heavy, Hyundai Mipo Dockyard Co. and Hyundai Samho Heavy Industries Co.

HHI’s contract with Peru comes weeks after the Korean company opened an office in charge of specialty ship engineering in Bonifacio, Manila to make the Philippines its base for selling warships throughout Southeast Asia.

The Korean company has so far won deals to build 18 warships in total from other countries, including a 2022 contract to build six 2,200-ton OPVs for the Philippines.

Write to Woo-Sub Kim at duter@hankyung.com

In-Soo Nam edited this article.