As the shipbuilding industry enters its first super cycle in more than a decade, Korea’s three largest shipbuilders, HD Hyundai, Samsung Heavy Industries and Hanwha Ocean, have accumulated at least three years’ worth of order books, which will lay the groundwork for the three shipbuilders’ business expansion. Currently, HD Hyundai and the other three shipbuilders are promoting sustainable growth by entering into business areas that create synergies with their main businesses.
South Korean media reported that HD Hyundai, Samsung Heavy Industries and Hanwha Ocean plan to consider adopting a proposal to amend their articles of incorporation at their upcoming shareholders’ meetings in order to expand their business scope.
HD Hyundai plans to hold a shareholders’ meeting on March 29 to put “new and renewable energy development, management, trading, supply, power generation, equipment leasing, and other new and renewable energy-related businesses” into its scope of business. Meanwhile, HD Hyundai disclosed the reasons for including new businesses such as renewable power medium- and long-term trading (PowerPurchaseAgreement, PPA) business (i.e., power purchase agreement) in its scope of business.
The PPA business is a system for companies to purchase and use renewable energy generation directly from power generation companies, and is the most widely used implementation of RE100 (100% Renewable Electricity), which is considered to be a stable way of procuring renewable energy in the long term.
HD Hyundai had set out a blueprint to convert 100 percent of the electricity used by its major subsidiaries, including Electric, Infracore and Construction Equipment, to renewable energy by 2040, and the Renewable Energy PPA business is the tool to realize this vision.
Samsung Heavy Industries will include ” marine fuel supply business and marine natural gas business” into its business scope at the shareholders’ meeting to be held on March 21, and will add “leasing” business to its existing business of “shipbuilding, repairing, modifying and selling”.
At the end of last year, Samsung Heavy Industries completed and delivered the Green Nuri, a multi-purpose barge for liquefied natural gas (LNG) fueling, and began full operation. The barge is equipped with one LNG storage tank with a capacity of 6,000 m3 and two liquid nitrogen storage tanks with a capacity of 350 m3. Samsung Heavy Industries has recently obtained a license for LNG refueling business.
Without a license for LNG refueling business, the shipyard has to obtain LNG fuel by external means to complete the final commissioning. Normally, Samsung Heavy Industries would send carriers to Korea Gas Corporation’s LNG terminals in Tongyeong and Gwangyang, or transport fuel by land via tanker trucks. Samsung Heavy Industries would be able to minimize the commissioning cost and time, and maximize profitability by refueling the ship itself in-house.
Hanwha Ocean will also add and clarify some of its business lines during the 21st Annual General Meeting of Shareholders to be held on March 21st. Specifically, Hanwha Ocean plans to add “generator ownership and operation,” “electrical design and construction, and telecommunication construction business,” “technical services related to the environmental industry, metering agency services, and construction business,” and “energy-related power generation and power sales” to its existing business scope.
Hanwha Ocean’s move aims to create synergies with its energy generation-related businesses, including offshore wind power. Previously, Hanwha Ocean announced its entry into the global offshore wind power market through a mid- to long-term business strategy aimed at achieving a complete value chain for hydrogen production and transportation from sea breeze. Recently, the company has registered a new trademark “Hanwha Drilling” for drillships and oil and gas drilling, as well as the new name of its newly established shipping company “Hanwha Shipping” with the Korean Intellectual Property Office.
According to a Korean industry insider, “With carbon neutrality being a global management topic and environmental regulations increasing, new businesses in the environmental field that can synergize with existing businesses are also on the rise. Attempts to expand business fields in response to the changing times will be centered on large corporations.”