Rheinmetall Defence Gets It Right With RDM
Rheinmetall Defence group has an impressive list of divisions and subsidiaries across international borders dealing in weapons and ammunition, vehicle systems, and electronic solutions. Even though the subsidiaries are responsible for their own respective market segments, Rheinmetall Defence has managed to strategically increase its overall global reach through these subsidiaries.
As a subsidiary of Rheinmetall Defence, Rheinmetall Denel Munition (Pty) Ltd (RDM) is jointly owned by Rheinmetall Waffe Munition GmbH of Germany (holding 51% of shares with 3 board members) and Denel (Pty) Ltd. of South Africa (holding 49% of shares with 2 board members). RDM was established in September 2008 when Denel divisions Somchem (Somerset West and Wellington sites), Swartklip, Boksburg, and Naschem were integrated into RDM. Surprisingly, the South African National Defence Force (SANDF) accounts for only 6% of RDM’s business and they acquire the majority of their munitions from the company. RDM’s big business lies in exports.
With 1 416 employees, RDM specializes in ammunition and develops, designs, and manufactures large and medium calibre munitions excelling in the field of artillery, mortar, infantry systems, and plant engineering for various filling and lapping facilities. Currently, RDM’s order book accounts for one and a quarter years of production. RDM has been growing at 20% per year and continues to invest in upgrading its facilities with the next three years seeing another R550 million investment (it has invested R1.1 billion to date). RDM is also conscious of the environment and is involved in protecting wildlife and sustaining biodiversity at three of its four production sites.
Around 70% of RDM’s current production comprises artillery rounds and mortars. In addition to producing a wide variety of ammunition such as the 105 and 155 mm artillery shells; 60, 81, and 120 mm mortars; 40 x 51 mm grenades; and 76/62 mm shells, RDM also manufactures bombs, rocket, and missile subsystems.
- Artillery ammunition (105mm and 155mm)
- Mortar ammunition (60, 81, and 120mm)
- Missile subsystems (propulsion units, warheads, etc.)
- Minefield breaching systems
- Ammunition for naval applications
- 40mm infantry ammunition and pyrotechnics
- Propellants and raw materials
- Ammunition and metal components
RDM’s largest export markets are the Middle East, Asia-Pacific, and Europe. RDM has been a supplier to Denel Dynamics for all rocket motor propellants (such as the A-Darter and Ingwe). RDM also provides Tawazun Dynamics (a joint venture between the United Arab Emirates (UAE) Tawazun Holdings and Denel) Al Tariq bomb kit with insensitive explosive filling for the Mk 81 and Mk 82 bombs. RDM is also the sole supplier of propellants for Forges de Zeebrugge FZ 70 rockets.
In North Africa following four years of construction, RDM is in the final stages of commissioning a universal filling facility able to fill a variety of munitions including medium and large calibre ammunition and aircraft bombs. In the Middle East, RDM in conjunction with Saudi Military Industries Corporation successfully built an ammunitions factory. Denel’s 2015 annual financial report showed a strong increase in booked orders with a current value of more than R3.1 billion (major booked multi-year projects from Singapore, Saudi Arabia, and UAE).
Potential future business includes a €28 million contract for Plofadder mine clearing systems and a €65 million contract for ammunition from an international customer. RDM CEO, Norbet Schulze, told DefenceWeb that RDM expects to win a R500 million contract from the Middle East for 40 mm grenades by the fourth quarter of 2017.
RDM is looking to expand into a R4.5 billion company and judging by its financials, it continues full steam ahead. There is no doubt of the positive impact Rheinmetall Defence had in its involvement with Denel as prior to RDM’s formation, Denel’s munition divisions were making a loss of R159 million. RDM’s launch in 2008 impressively resulted in a R89 million profit in 2009.
Written by Sylvia Caravotas (Satovarac Consulting) for OIDA