Denel Dynamics UAVS a profitable business in a fast growing industry


The unmanned aerial vehicles (UAVs) market is highly competitive, yet Denel Dynamics has been able to make this arm of the Denel Group a profitable one. The company expects its new products, the Hungwe small UAV and the Seeker 400 armed surveillance UAV, to further consolidate its position as Africa’s only supplier of short, medium to long range tactical UAVs.

Tsepo Monaheng, Deputy CEO of Denel Dynamics, told defenceWeb that the unmanned aerial systems market is one of the fastest growing industries in the world. “It’s a profitable business,” Monaheng said, adding that he was happy with the financial performance of the Denel arm. Although happy with the entity’s short-term performance, he would like to see more orders. These may arise duringthe Africa Aerospace and Defence exhibition at Air Force Base Waterkloof this week, where Denel Dynamics will have its entire product range on display.

One of the company’s products that is expected to generate a lot of interest is its Seeker 400. This UAV has been developed by Denel and funded from the company’s balance sheet – approximately R140 million has been invested in the project.

The Seeker 400 has an endurance of 16 hours and can be armed with two Mokopa air-to-surface missiles. It is able to carry two payloads at the same time, including electro-optical/infrared and radar. Future upgrades will include satellite communications, and sense-and-avoid capability in order to obtain civil aviation certification.

Development is expected to conclude at the end of the current financial year (ending March 31) and first flight is expected for late November 2012. The model’s maiden flight was projected to occur earlier in the year, but was delayed due to finalisation of the certification requirements and contracting thereof. It will be designed to military standards as phase one, and will achieve civil certification during the second phase. Monaheng said that the Seeker 400 has received its certification contract and the project is running at full steam. Delivery of the first production system is expected at the end of 2013.

Denel Dynamics is executing a production contract for the launch customer and has also attracted strong interest from two potential clients. “There’s huge interest coming through” regarding the Seeker 400, Monaheng said.

He told defenceWeb that the Seeker 400 differentiates itself from other products on the market through designed in reliability inherited from the Seeker II success, military certification, lifetime support and Denel’s reputation and experience in producing Unmanned Aerial Systems (UASs). He noted that Seeker II customers have expressed satisfaction with their systems. “Our clients tell us our systems are designed such that they can be operated reliably by clients without company support for very long periods of time,” Monaheng said. This means that information the Seeker gathers remains confidential to the user.
“The capability of carrying precision-guided munitions makes the system ideal for asymmetric warfare, peace support, homeland security, combating piracy and strategic national assets protection. There is a constant drive in such operations to limit collateral damage through the use of precision weapons and advanced targeting payloads,” said Monaheng. “The world is rapidly moving to armed surveillance UAVs,” added Jan Wessels, CEO of Denel Dynamics. An armed UAV can be used to strike a target after patrolling for hours, instead of sending out a second aircraft with weapons once a target has been located.

Monaheng anticipates most demand for the Seeker 400 as coming from the Middle East, Southeast Asia and South America. “If the Seeker II is not the best tactical UAS in the world, it is one of the best,” Monaheng said, due to the aircraft’s ability to withstand hot, dusty conditions. Africa is not a big market due to affordability – a Seeker 400 system (a system typically comprises three aircraft, three payloads and a ground station) costs approximately R210 million, while a Seeker II system costs R150 million and Denel Dynamics’ latest small UAV, the Hungwe, costs around R5 million.

In order to focus on the low cost and civil UAV market segments, Denel Dynamics UAVS is developing the Hungwe small UAV, with funding from its own product development budget. This has a 6-hour endurance and a direct line of sight range of 100 km. The system’s service ceiling is up to 10 000 ft and it will have a 5 kg mission payload (fuel excluded), with a piloted and autonomous flight capability. First flight of the Hungwe occurred three weeks ago.

Mobility and portability is a prerequisite and the Hungwe’s ground control station will be quick to setup, easy to use, and compact enough to transport in the back of a commercial light utility vehicle. The aircraft is fitted with a day or night payload, and communications link on board the aircraft enables real-time communication up to 100 km from base. The system will consist of two air vehicles, one ground control station, two payloads, a launcher and field support equipment.

Denel Dynamics believes there is a large market for the Hungwe as it fills a low-cost market niche. Monaheng noted that in the military, the most important consideration regarding UASs is reliability while in the civil domain it is cost. There is huge demand from South East Asia for the Hungwe and Denel Dynamics is in discussion with an international client regarding joint development. Monaheng estimated demand for the Hungwe to be five times that of the Seeker II. At worst, production would be three systems per year. Denel Dynamics plans to deliver the first system in the first half of next year.

Locally the police force would benefit from the Hungwe, as until now, available unmanned systems have been unaffordable for non-defence applications. When it comes to the serious issue of anti-poaching, Denel said the UAV would be particularly relevant to South Africa’s current fight against rhino poachers. “We’d love to engage the police and the paramilitary environment,” Monaheng said, adding that he was looking forward to seeing if Denel can optimise solutions for those markets. “Unmanned aerial systems are valuable assets for the police,” he noted. Wessels said that the Hungwe could be used locally by Transnet, Telkom and other organisations for things like copper cable theft prevention.

Monaheng said the Hungwe is aiming to take a sizeable chunk of the civil UAV market, but Denel Dynamics will be able to properly test the market once the aircraft is in production. “Our indications are that it’s going to be a very good business for Denel going forward.”

Denel Dynamics has upgraded the venerable Seeker II with a more powerful aero-engine, more capable avionics, an automatic takeoff and landing system and a laser designator to create the Seeker II+. The mobile and self-contained system is capable of operating from semi-prepared gravel runways and has a range of more than 250 km with a 10 hour endurance. Denel Dynamics is investigating the possibility of carrying the Impi missile on the Seeker II, but the main focus is on arming the Seeker 400 with the Mokopa.

One of the important changes on the Seeker II+ is a vastly increased time between servicing – the improved model can fly 200 hours between servicing versus 75 hours for the Seeker II.

Apart from surveillance UAVs, Denel Dynamics also produces the Skua high-speed target drone, which has been used to test the company’s missiles, notably the A-Darter. The South African Air Force used Skua in the run up to the 2010 Soccer World Cup for security preparation of the Gripen fighter aircraft. The system was used by the SA navy as the target in a vertical launch of a Denel Dynamics Umkhonto surface-to-air missile from a navy vessel. The Skua has also been used by other international clients, including Brazil, which is co-developing the A-Darter.

Monaheng said that Denel Dynamics is investigating the possibility of an upgraded and improved Skua. A decision on possible investment will be made next year, based on market size.

Denel said that the South African UAV industry aims to capture in excess of 20% of the market for UAVs in emerging markets. “We are ideally positioned to collaborate with certain developing countries, offering first world expertise in UAV and missile capabilities,” said Monaheng.

He added that Denel Dynamics has been engaging BRICS (Brazil, Russia, India, China and South Africa) countries regarding UAVs but rather than buying off the shelf systems, these countries are more interested in jointly developing unmanned aerial systems with South Africa.

As the market is growing, it is attracting a lot of new entrants. In order to cope with competition, Denel Dynamics is aiming to leverage its long reputation in the business as well as provide reliable, upgradeable and complete solutions. One of its most important assets is its ability to integrate systems – Denel Dynamics and Carl Zeiss Optronics provide a range of sensors and weaponry for UAVs and are all located in the same area. “That gives us a competitive edge,” Monaheng said. “UAVS, as a part of the Denel business, has the potential to become an important revenue generator in the group. The challenge is to take products to the market.” Denel Dynamics has the full support of the government and other stakeholders and is talking to the South African National Defence Force, which would like to acquire UAVs.