New Markets for Rheinmetall

von Alexander Lurz

Rheinmetall AG has finalized the take-over of the South African ammunition producer Denel Munitions. On September 4th 2008 the Düsseldorf based arms maker announced it had finalized the deal. Already in February of this year a contract had been signed in Pretoria. Now the acquisition of a 51% share of Denel Munitions is legally valid. Rheinmetall has reported that the anti-trust commissions have given approval and that all contractual precondition had been fulfilled.

Denel Munitions has got about 2.000 employees and an annual turnover of approximately 90 Million Euro producing ammunition ranging from calibre 5.56 mm to 155 mm. It had previously been a 100% subsidiary of the state-owned Holding Denel (Pty) Ltd., which retains a 49% share.

Denel Group board member Lana Kinley called the agreement a “significant milestone” in securing the future of the holding company which has run to deficit for years. According to its press release Rheinmetall is looking forward to “continuing moves to internationalise its defence technology operations and to expand its market presence” in South America, Asia and the Middle East – which it has been largely barred from due to German export restrictions. The statement goes on to say that those markets would be served “with a complete portfolio of products”. The appointment of Shaun Liebenberg, previously CEO of Denel Group, to the Management Board of Rheinmetall Defence underlines the intention to utilize the South African experience outside NATO markets and NATO associated countries. Since July 1st of this year Liebenberg is responsible for International Business Development.

For Rheinmetall the take-over of Denel Munitions does not only mean access to highly problematic markets in Africa, Denel’s core market, and the Middle East. Moreover, the German arms maker thus enters into the production of small arms ammunition of calibres 5.56 mm and 7.62 mm. It seems certain that the German–South African small arms ammo will find its customers as Denel Group’s subsidiary Denel Land Systems produces sniper rifles and machine guns both for the South African market and for export (http://jdw.janes.com/public/adlink/ads/1291514.pdf).

is a small arms researcher at the Berlin Information-Centre for Transatlantic Security (BITS).