Neom terminates $1B tunnel contract with Samsung C&T and Hyundai E&C

A consortium led by Samsung C&T and Hyundai Engineering & Construction has had its contract to build a 12.5-kilometer underground tunnel in Saudi Arabia’s Neom megacity project terminated by the project’s owner, Neom Company, due to a restructuring of the program. The work, which had been won with a three-way bid that also included the Greek firm Archirodon, was part of the larger Neom plan facing changes in pace and scope.

Hyundai Engineering & Construction disclosed on the 13th that it had received a termination notice from Neom Company the day before. The company said the termination was requested because of the client’s project reorganization, and it did not indicate any immediate financial loss to date beyond the settled portions of the work. The contract’s value is reported as about $1 billion, and Hyundai E&C’s disclosed stake in the project portion was roughly KRW 723.1 billion. The contract originally had a completion date of December 29, 2025.

The tunnel sits beneath Neom’s “The Line,” a flagship element of the project described as a linear city whose infrastructure includes tunnels to support highways, a subway system, and freight rail. The Neom project has emphasized underground transport corridors as a core component of its design. The 12.5-km section was part of a broader tunneling program within The Line.

Industry observers note that Neom is undergoing a reassessment of its scale and timetable. Reports indicate The Line, initially planned to extend about 170 kilometers, may be pursued in phases, with some infrastructure works and the overall project structure being reexamined as part of a broader review of the mega-project.

The termination comes amid renewed attention in South Korea to its role in the Middle East’s construction boom. Under the Yoon Suk Yeol administration, Seoul foregrounded Neom as a key opportunity for Korean builders to expand abroad, highlighting cooperation with Saudi Arabia and organizing forums to connect domestic firms with Saudi capital via government-supported initiatives and a private-public “One Team Korea” procurement support network.

For U.S. readers, the episode highlights how large-scale, state-backed infrastructure ventures in the Gulf—intended to diversify oil-dependent economies and deploy advanced technology—reverberate beyond the region. Such megaprojects influence global supply chains for steel, cement, and specialized construction services, affect international EPC markets, and shape strategic ties among the United States, Saudi Arabia, and allied partners as countries weigh diversification, investment risk, and technology transfer in the Middle East. The evolving Neom plan also tests the resilience of international contractors and the reliability of long-term megaproject commitments in a rapidly changing geopolitical and economic environment.