Saudis push for joint ventures in defence

Saudi Arabia has made a $1 billion bid for a broad partnership with South African state-owned defence group Denel that would include acquisition of a minority stake in a joint venture with Germany’s Rheinmetall, a source familiar with the offer said.

Saudi Arabia, the world’s third-largest defence spender, is seeking partnerships to develop its own domestic defence industry with the goal of localising half of its military spending by 2030. Saudi Arabian Military Industries (SAMI), the state defence company, said last month that it was in discussions with all major South African firms and aimed to conclude the first deals by the end of this year.

According to the source, Saudi Arabia was targeting Denel’s 49 per cent stake in Rheinmetall Denel Munition (RDM). The Saudis expect an answer from the South African authorities by the end of December.

“Saudi Arabia has made a unique business proposition to the South African government. As our discussions are not finalised yet we cannot provide any comment,” SAMI CEO Andreas Schwer said.

RDM is a South Africanbased joint venture formed in 2008 between Denel and Rheinmetall Waffe Munition GmbH, which holds the remaining 51 per cent stake. It specialises in the development, design and manufacture of medium and largecalibre ammunition.