Hyundai E&C: Neom tunnel project construction order cancelled

Hyundai E&C, a South Korean construction firm, secured a contract in 2022 to construct tunnels for Saudi Arabia's Neom City project, specifically for The Line, a planned linear city. The company highlighted the project as a key achievement in its 2022 annual report, emphasizing its role in advancing its global construction capabilities. However, recent developments indicate a scaling back of Neom's ambitions, with implications for Hyundai E&C and other Korean firms involved.

Saudi Arabia's Neom project, initially projected to cost $500 billion, has faced repeated delays and scope reductions. Reports suggest the length of The Line has been cut from 170 kilometers to approximately 2.4 kilometers, while other components, such as a desalination plant in Oxagon, have been canceled. Korean industry sources note that most memorandums of understanding (MOUs) signed for Neom have not translated into binding contracts, with Hyundai E&C among the firms yet to receive follow-up orders beyond the initial tunnel work.

Hyundai E&C acknowledged the challenges, stating that Saudi Arabia's financial constraints and shifting priorities have impacted project timelines. A company official indicated efforts to secure participation in The Line's Hidden Marina zone through ongoing bids but confirmed no new major contracts have materialized. Analysts attribute the setbacks to broader factors, including the Red Sea shipping crisis, rising costs, and Saudi Arabia's allocation of resources to other initiatives.

Despite these hurdles, Hyundai E&C remains focused on expanding its nuclear energy and carbon capture technologies, areas it prioritized in its 2022 strategic roadmap. The firm's Neom involvement underscores the risks of large-scale international infrastructure projects, where geopolitical and economic dynamics can significantly alter outcomes.