HD Hyundai will begin full-scale shipbuilding operations at the Subic shipyard in the Philippines starting in the fourth quarter of this year. The Subic shipyard was owned by Hanjin Heavy Industries, but it changed hands to a U.S. private equity firm after it went bankrupt in 2019. As the Philippine government proposed to the U.S. government to utilize the Subic shipyard as a base for constructing U.S. Navy vessels, forecasts suggest that HD Hyundai's options for utilizing the shipyard will broaden.
According to the shipbuilding industry on the 18th, HD Hyundai has decided to build large and mid-sized oil tankers at the Subic shipyard starting in the fourth quarter. HD Hyundai will sign a 10-year lease agreement with Aguila Subic, the operator of the shipyard, and invest a total of $550 million (approximately 763.2 billion won) to refurbish production facilities within the shipyard.
The Subic shipyard is located in the Subic Bay Freeport Zone, 110 kilometers northwest of Manila, the capital of the Philippines. In 2006, Hanjin Heavy Industries purchased about 300 hectares of land from a U.S. Navy base to create a large shipyard. However, as Hanjin Heavy Industries entered rehabilitation in 2019, operations at the shipyard were halted, and Cerberus Frontier, a U.S.-based private equity firm, acquired it in 2022.
HD Hyundai plans to utilize 200 hectares of the entire site. The remaining area is used by the Philippine Navy. HD Hyundai aims to build up to 10 vessels annually at the Subic shipyard and employ over 7,000 workers within five years. The plan is to operate it as a core infrastructure supporting both offshore wind platform construction and shipbuilding.
With the Philippine government proposing to the U.S. government to develop the Subic shipyard as a base for constructing U.S. Navy vessels, prospects are also emerging that the utilization of the shipyard will broaden. Jose Manuel Romualdez, the Philippine ambassador to the U.S., stated in an interview with local media, "The U.S. wants to grow its shipbuilding industry. I am confident that the Subic shipyard can be part of the U.S. Navy vessel project."
The domestic shipbuilding industry is also considering utilizing the Subic shipyard as a base for maintenance, repair, and overhaul (MRO) of U.S. vessels. The 'Barns-Tollerson Amendment,' which prohibits constructing U.S. Navy vessels in foreign shipyards, is a variable; however, amendments to it are gaining momentum. Recently, a bill was introduced in the U.S. Congress that includes utilizing shipyards in allied countries, including Korea, to construct U.S. Navy vessels.
Han Seung-han, a researcher at SK Securities, noted, "If the demands of HD Hyundai, the Philippine government, and the U.S. Navy align, the U.S. Navy vessel project, including MRO, is expected to proceed in earnest."