Brazilian Shipbuilding "Renaissance" Stalls, Samsung Heavy Sells Stake in Struggling Shipyard

RIO DE JANEIRO (Dow Jones)–South Korea’s Samsung Heavy Industries Co. (010140.SE), the world’s second-largest shipbuilder by sales, sold its 6% stake in troubled Brazilian shipyard Estaleiro Atlantico Sul, Brazilian business daily Valor Economico reported Friday.

Local construction firms Camargo Correa and Queiroz Galvao now each hold 50% of the shipbuilder, also known as EAS, according to the report.

Samsung‘s exit comes amid a series of problems at the shipyard that have caused extensive delays. EAS has a backorder of 22 vessels, 18 of which are behind schedule. Many of the vessels are key orders from state-run energy company Petroleo Brasileiro (PBR, PETR4.BR), which needs the ships and drilling rigs to support development of recently discovered offshore oil fields.

EAS is one of several shipyards that are part of a renaissance in Brazil’s shipbuilding industry sparked by growing demand from the country’s oil and natural gas industry. Several new shipyards are under construction along Brazil’s Atlantic Ocean coast, while many yards that were closed during an industry downturn in the early 1980s are being revived. Brazil was among the world’s largest ship producing countries in the 1980s before a global downturn in the industry saw the local docks shuttered.

Earlier this month, Samsung said it was considering a request for help from EAS as the shipbuilder struggled with the delays, blamed on a strike and the ongoing euro-zone crisis. Samsung provided technical support to the shipyard in Pernambuco state.

-By Jeff Fick, Dow Jones Newswires