Hyundai Heavy to Tap Brazilian Construction Equipment Market

Hyundai to spend $150 million to build construction equipment plant in Brazil.

Hyundai Heavy Industries Co. (KSE:009540), the world's largest shipyard, said Tuesday that it will spend US$150 million to build a construction equipment plant in Brazil in an effort to break into the largest market in Latin America.

To that end, Hyundai Heavy signed a preliminary agreement with a local Brazilian government to establish a factory in Rio de Janeiro by the end of next year, the company said.

Once completed, the plant will have a capacity to manufacture 2,000 units of excavators and loaders. Hyundai Heavy plans to ramp up production to 4,000 by 2014.

The move comes as demand for construction equipment is expected to sharply grow in the coming years as Brazil is set to host the 2014 World Cup and the 2016 Summer Olympics.

The Brazilian government plans to establish high-speed railroads, expressways and new power plants ahead of the international sporting events, which will spike demand for construction machinery.

The upcoming plant will provide a foothold for the shipbuilder to expand its presence in the Latin American market, Hyundai Heavy said. The company is also expected to benefit from customs-free policies among Latin American countries when shipping its products to Brazil's neighboring countries.

Hyundai Heavy currently operates construction machinery plants in China and in India.