HD Hyundai Heavy Industries announced Monday that it signed a memorandum of understanding with state-operated shipyard SIMA Peru in Lima, Peru, last week to jointly develop submarines as part of the Peruvian Navy’s vessel replacement project.

Through the partnership, HD Hyundai and SIMA will make joint efforts to win contracts and develop submarines tailored to Peru’s Navy. HD Hyundai also plans to strengthen its partnership with the Peruvian government and navy, supporting the local shipbuilding industry there.

HD Hyundai has secured preferred bidder status for future vessel projects over the next 15 years. In April, HD Hyundai and SIMA signed a contract worth 640 billion won ($460 million) to jointly build four vessels.

"We expect Peru to become a key production hub in Central and South America,” said Joo Won-ho, head of HD Hyundai Heavy Industries’ special ship business. “By expanding the vessel business with global partnerships, we aim to solidify our nation’s position in the defense industry."

Peru President Dina Boluarte also reportedly anticipated the latest deal would be a significant milestone, reflecting friendship, trust and cooperation between two nations.

A SIMA Peru official added, "Through our comprehensive partnership with HD Hyundai, a global leader in shipbuilding, we hope to enhance our technology and capabilities in the submarine sector. Based in Peru, we will work together for shared growth in the South American market."

The signing ceremony was attended by President Yoon Suk Yeol and Boluarte upon the Korean president's visit to Latin America. Earlier in the day, both presidents left their signatures on the nameplate of a ship currently being built by HD Hyundai and SIMA Peru.