HYUNDAI TO BUILD SOUTH-KOREAN SUBS

Hyundai Heavy Industries Co. will build 1,800-ton German-designed submarines for the South Korean navy, the Defence Ministry said Wednesday. The ministry has chosen Hyundai Heavy as the successful bidder for the $1.1 billion KSS-II project to build sophisticated submarines. Hyundai Heavy, a shipbuilding arm of the giant Hyundai conglomerate, will build three submarines by 2009 in a technological tie-up with Germany's Howaldtswerke-Deutsche Werft AG, it said. The ministry plans to embark on the project right after receiving presidential approval in early next month. Earlier this month, South Korea selected the German company's Type 214 submarine over the French Scorpene submarine because the Germans offered a better price and parts supply. By acquiring German technology, South Korea hopes design its own submarines, officials said. South Korea had cancelled its plan to buy Russian Kilo-class submarines as part of Moscow's repayment of $1.75 billion owed in loans to Seoul, citing Russian submarines did not meet its requirements in terms of battery quality, navigation capacity and communications and logistic support systems. "We selected Hyundai Heavy because its financial structure is solid and it offered favourable financial terms," the ministry said. Hyundai Heavy outbid Daewoo Heavy Industries Co., which so far has built 1,200-ton submarines with German technology. Daewoo Heavy has suffered a liquidity crunch after its parent conglomerate, Daewoo collapsed in the wake of the Asian financial crisis in 1997, UPI reports.